Contacts between Independent Alliance TDs and junior minister John Halligan were continuing last night in an effort to keep the Waterford TD in government.

However, senior sources in both Fine Gael and the Independent Alliance were growing increasingly pessimistic about Mr Halligan's participation in the minority Government, with some senior Fine Gael figures saying privately that the administration would be better served if he resigned.

Independent sources say they are making strenuous efforts to persuade Mr Halligan to stay in Government, but that if he leaves, other members of the Alliance will not follow him.

Mr Halligan's resignation would not eliminate the minority Government's ability to command a majority in the Dáil when Fianna Fáil abstains, but it would reduce its majority in those circumstances to one vote.

Both Fine Gael and Independents accepted that Mr Halligan's future in Government hung in the balance last night as his colleagues in the alliance sought to persuade him to accept an offer by Minister for Health Simon Harris to provide additional resources for Waterford hospital, but not the second catherisation laboratory he had sought.

Broken promises

A catheterisation laboratory is used for the diagnosis of heart complaints and has been a subject of local campaigns for improved cardiac services.

An independent clinical review published yesterday found that a second laboratory was not required.

Mr Halligan said that he was promised a second laboratory during talks with Fine Gael on the formation of a government, and said that he was told by Minister for Finance Michael Noonan that the review was a "formality".

He later said that Fine Gael had acted “dishonourably” and “broken their promises”.

Senior Fine Gael sources have hotly contested Mr Halligan’s account of negotiations with the party prior to the formation of the Government and insisted that the Waterford TD was only ever promised a review of services at the Waterford hospital.

The Government spokesman has insisted that it had carried out a review exactly as it pledged in the programme for government.

He pointed to a letter from Mr Noonan and Simon Coveney during the coalition talks promising a review.

A spokesman for the Independent Alliance said that Mr Halligan had “a different perception of what was said at the time”.