The Minister for Justice, Mr McDowell, has given the Prison Officers Association 10 days to agree a new overtime pay deal with the Irish Prison Service.
If agreement cannot be reached, he intends to implement a plan which could lead to the closure of four of the State's 16 prisons.
A delegation from the POA and prison service will meet in Dublin this morning to begin a series of intensive negotiations aimed at reaching agreement within the 10-day period. The POA said last night the Minister's deadline was "unrealistic and unhelpful".
Mr McDowell said contingency plans were at an advanced stage and would be implemented if agreement was not reached by November 9th. "The cost in human and financial terms of current attendance levels in Irish prisons is simply unsustainable. The funding is not and will not be available for its continuance."
He added contingency plans would be "fine-tuned" by the Government in coming days. These would "achieve the necessary economies" needed to cut the prison service's overtime bill, which will exceed €64 million this year.
The closure of some prisons is included in those plans as is a proposal to privatise escorts between prisons and courts, hospitals and other locations.
The Curragh Place of Detention in Kildare, Cork's Fort Mitchell prison, Loughan House in Cavan and Shelton Abbey in Wicklow have long been identified as most likely for closure should a pay deal not be reached.
Mr McDowell's ultimatum came after the prison officers rejected a proposed deal on annualised hours by an overwhelming majority. Fewer than 1 per cent of officers balloted by the association over the last month voted in favour.
The deal would see officers receiving a lump sum of just over €10,000 in return for working a maximum of 360 hours overtime per annum. The money would be paid even if the hours were not worked. The officers would also be entitled to a payment of €12,250 over three years.
Mr Eugene Dennehy, deputy general secretary of the POA, said the association would work with the prison service "so that a fair and just solution can be found".
The director general of the Irish Prison Service, Mr Seán Aylward, said he was still optimistic agreement could be reached within the next 10 days despite the overwhelming opposition by prison officers to the current deal.
When asked if plans were in place to deal with any all-out strike by prison officers, Mr Aylward said: "Every contingency has been planned for."
If no deal can be struck, the four prisons will be closed and prisoners transferred to other facilities around the State. The prison officers working at those prisons would also be transferred, significantly reducing the level of overtime needed to operate the 12 remaining prisons.
It is understood individual prison officers would be deployed to prisons closest to those where they are currently working.
Figures obtained by The Irish Times from the Department of Justice reveal the four prisons could be closed with minimal, if any, overcrowding across the rest of the prison system.
As of last month there were 309 inmates in the four prisons earmarked for closure, with 277 free beds in the remainder of the State's male facilities. That means maximum capacity across the entire prison service would be exceeded by just 32 inmates if the four facilities were closed.
Shelton Abbey and Loughan House are minimum security or open prisons. Many of the inmates represent a low risk to the community and are on regular day release. They could be fully released at short notice.