The Minister for Justice, Mr McDowell, has joined other European Ministers in rejecting a CIA-type agency to boost security co-operation in the fight against terrorism and weapons proliferation in Europe.
Austria had called for a European Intelligence Agency (EIA) in a discussion paper. It said such an agency would be "a center for analysis and monitoring, focusing on terrorism and proliferation".
The paper said events such as the Iraq war and a spate of letter bombs sent to European officials highlighted the need for an information network as part of a wider EU security strategy adopted last year by the bloc's leaders.
"This agency should be expanded gradually and in stages. The starting point should be to create European capacities for analysis in key areas of European security," said the paper, drafted by Austrian Interior Minister Ernst Strasser.
But Minister McDowell said EU states agreed there was a need to increase existing cooperation but said it should be under the auspices of the EU's police agency, Europol, and other bodies instead of creating a European CIA.
"There was a strong sense that before we create new agencies we have to learn to walk, before we can run," Minister McDowell told reporters after the meeting.
"It was thought there was a huge need for on-the-ground concrete cooperation to be enhanced ... rather than to create a paper solution to a real practical problem of getting ... secretive organisations to trust each other and work with each other for the common good," he added.
Mr Strasser had said the EU had no formal cooperation to share intelligence properly apart Europol, which pools and analyses information from European law enforcement bodies.
"So I think it is necessary to have, with Europol as the basis, a European institution to give us a picture of the actual situation on terrorism," Mr Strasser said, adding that details of the agency would have to be worked out.
German Interior Minister Otto Schily echoed Ireland's stance, but at the same time did not rule out the possibility of the EU setting up its own intelligence service in the long-term.
"I am sceptical that we, at this moment, can come to the point of creating a European intelligence service," Mr Schily told reporters.
Sweden dismissed the idea outright.