Fine Gael predicted it would be back in government by 2007 after its successful showing in the local and European elections.
Housing spokesman Mr Bernard Allen TD said the party's performance showed it had renewed energy and drive.
"It is now a lean, efficient fighting machine. We had a target of 25 per cent of the vote coming into the local election. We've surpassed that and what we've seen is a stepping stone to government in three years' time," he said.
Mr Allen was speaking as Fine Gael TD Mr Simon Coveney won the second European seat in the South constituency on the third count. Mr Allen said Fianna Fáil would not be able to recover from their losses in the two elections.
"People are sick and tired of their promises. I believe people won't be bribed by the Special Savings Account (which are due to paid out in 2007) or issues like that.
"I don't see any reason why a combination of Fine Gael and Labour and/or the Green Party would not be very attractive as a coalition government."
Fine Gael TD Mr David Stanton said his party had narrowed the gap with Fianna Fáil. "If there was a general election in the morning, Fianna Fáil would be gone and we'd be in government," he said.
PA