Taoiseach Bertie Ahern has told the Dáil that Government ministers will defer for one-year pay rises awarded to them by an independent pay body.
The rises, which would have seen Mr Ahern's salary rise by €38,000 to €310,000 and make him Europe's best-paid leader, were discussed by the Cabinet today.
The move marks a significant change in stance by Mr Ahern who had ruled out deferring or rejecting the pay rises at the beginning of November. Then, Mr Ahern said the pay rise "will be implemented over the next two years and that's it".
"Governments can defer these things for a period and then, as they have previously done, go back and pay it all again. That's really only playing smokes and daggers with it," the Taoiseach said.
Opposition parties dismissed today's move as an effort to defuse public anger at the wage rises. It emerged recently that almost 1.5 million people earn less than the €38,000 pay increase awarded to Mr Ahern.
Labour Party leader Eamon Gilmore said the wages were being deferred to "get the Government over the potential embarrassment of having to enter talks on a new partnership agreement, which are due to begin in the new year, with their wallets bulging with this unprecedented windfall".
Fine Gael leader Enda Kenny said postponing the pay rises was hypocritical.
The reaction to the pay rises had prompted unease in Cabinet, with Minister for Health Mary Harney saying over the weekend that there was "a lot of merit" in the idea of a moratorium.
The Minister for Community, Rural and Gaeltacht Affairs, Éamon Ó Cuív, had admitted to being "uncomfortable" about the pay rise.
The scale of the rises for politicians and higher civil servants were determined by the Review Group on Higher Remuneration and involved approximately 1,600 recommendations. The average recommendation was for a 7.3 per cent rise.
The Tánaiste Brian Cowen was in line for a 15.6 per cent rise, bringing his salary to €270,000, while ministers and junior ministers will receive a 12 per cent rise, to €240,000 and €165,000, respectively.
The pay increases were due to be phased in from September 14th last until March 2009, and will add about €16 million a year to the public sector pay bill.