The Department of the Environment and Galway City Council say they have "resolved" a controversy over the purchase of private housing which left 26 home-owners in financial difficulty.
The department says it is now satisfied the local authority will have sufficient funding to proceed with the purchase of the properties for its housing list.
The local authority says it is happy that a shortfall in funding, believed to be about €10 million, will be met by the department.
Many of the affected property owners had received booking deposits from the local authority, but were then informed that the sales were no longer going ahead.
This left a number in a situation where they were caught with two mortgages as they had initiated new purchases elsewhere on the strength of the local authority deals.
A report by the local authority which was issued to councillors yesterday indicates that the purchases will now proceed subject to "satisfactory inspection reports and meeting all other requirements". The report, drawn up in advance of an emergency meeting on the issue next Monday, says the council acted "responsibly and prudently" when "uncertainty" over funds arose.
It had purchased 60 houses and was under contract to buy another 63 at a total cost of €36.1 million. Contracts on another 26 had not been signed, but booking deposits had been paid and requests for contracts had been sent to solicitors, when the funding issue arose.
The department has allocated €20 million to the local authority this year and has approved a loan of another €20 million from the Housing Finance Agency.
Galway City Council also has €5 million in "part V" funds available to it for use on increasing its stock of social and affordable housing.
The local authority says it is "on course" to spend €55 million on social and affordable housing this year.