Fianna Fail benefited by around £1 million from a practice under which donors picked up the bills for services provided to the party, a spokesman confirmed yesterday.
The spokesman told The Irish Times that over an 11-year period, from 1987, "pick-me-up" (PMU) bills were taken care of by donors 60 to 70 times.
In a statement issued on Friday night, Fine Gael said payments totalling £90,000 had been made in respect of goods and services on behalf of that party.
Those payments were made in 1989, 1994 and 1995. The Taoiseach said at the weekend he was "aghast" at a suggestion from the Fine Gael leader, Mr Michael Noonan, that Fianna Fail had questions to answer in relation to this kind of payment.
"I was aghast because it was Fianna Fail back in 1998 who went to the Revenue Commissioners and asked for clarification about the top-up payments, about their legality or otherwise and got a determination from the Revenue," Mr Ahern said.
"We handed over our entire records and all the people that were involved and all of the taxes were resolved. I put that in the public domain at the time.
"So Mr Noonan's suggestion that we would follow them - I'm afraid that three years later he's following us," said Mr Ahern.
Fine Gael also admitted on Friday that it gave £120,000 in illegal under-the-counter cash payments to its staff over a nine-year period.
Last night, Fine Gael TD Mr Enda Kenny said he was as shocked as anybody by the revelations. "It's not just an embarrassment, but it's blatantly wrong. Fine Gael should never have been involved in this," he said.
Speaking on RTE's The Week in Politics, Mr Kenny added that he knew nothing of the matter until it was revealed on Friday: "This came as a bombshell to me. All I can do is apologise."
The Mayo TD, who lost to Mr Noonan in the party leadership vote in February, said Mr Noonan had had "a ferocious run of bad luck". On the pick-me-up issue, he hoped Mr Noonan would "clear this up" at Wednesday's parliamentary party meeting, and demonstrate that it would never happen again.
The Minister for Social, Community and Family Affairs, Mr Dermot Ahern, said yesterday that Fine Gael had traded politically on its probity for the last 10 years.
"Its long-serving finance spokesperson, Mr Michael Noonan, repeatedly lacerated all and sundry for shortcomings in their tax affairs.
"It now transpires that moral indignation in public about evasion was all the while paralleled by systematic tax fraud in Fine Gael headquarters," said Mr Ahern.
The practice by which donors paid bills on behalf of political parties was mainly used to fund election expenses.
Typically, a company would offer to pick up the expenses for the printing of leaflets or posters. The names of these companies were given to the Revenue Commissioners.
The matter was first raised by Fianna Fail in June 1998. It was apparently noticed during a trawl of files for the Flood and Moriarty tribunals undertaken by the party.