Fianna Fáil has established an internal committee to examine allegations that Dublin City Council member Liam Kelly took cocaine.
Taoiseach Bertie Ahern announced the move yesterday.
Mr Kelly has denied that he was taking drugs in a photograph, published in some newspapers last month, which showed him hunched over white powder with a rolled-up piece of paper.
Mr Kelly has said he was merely rolling a cigarette and has made a complaint to gardaí. He believes he was the victim of a blackmail attempt to exhort money from him.
Fianna Fáil wrote to Mr Kelly earlier this week, saying that a committee of investigation, composed of members of the party's national executive, was being established.
A spokesman said yesterday that both the Taoiseach and the party expected him to co-operate with the inquiry.
The decision to set up an investigation follows a series of inconclusive contacts between Mr Kelly and party headquarters. Last month Fianna Fáil, through its solicitors, sent the councillor a letter asking for a full written account of the circumstances surrounding the alleged photograph. However, the party still does not have the full details of what happened.
Mr Ahern told reporters yesterday that he had asked Fianna Fáil general secretary Seán Dorgan to set up a committee to examine Mr Kelly's case. Referring to Mr Kelly's claim that he was the victim of an extortion attempt, the Taoiseach said this was a legal issue for the Garda to deal with.
"The issue that concerns the party is: was he snorting cocaine or was he not? If he was, that's a serious matter and the party will deal with it. If one of our elected representatives snorted cocaine, that is a serious matter and it will be dealt with as a serious matter and there will be no fudging or hiding from that . . . "
Cllr Kelly, who represents the Finglas area, was first co-opted on to Dublin City Council in spring 2004 and then elected in the local elections later that year.
The photographs are stills from a mobile phone video clip taken at a party in an apartment attended by Cllr Kelly.
Efforts to contact him yesterday were unsuccessful.
