The Government was urged to use its "considerable muscle" and the "economic might" of the bank accounts in its control to force the major banks to reverse an "anti-social" decision to refuse to cash cheques over the counter.

The deputy Labour leader, Mr Brendan Howlin, said: "Many elderly people, students and people on social welfare do not have bank accounts, and indeed many workers do not have a current account, a deposit account or an account with a credit union".

Raising the issue in the House he said it was "an unacceptable imposition on the community in the light of the banks' responsibilities".

The Fine Gael leader, Mr Michael Noonan, said some of the banks were trying to force people to open bank accounts to increase business.

The Minister for Education, Dr Woods, reminded the banks that they should remember "the fact that they work within the country as part of the community and as part of our society".

Dr Woods, who stood in for the Taoiseach on the Order of Business, said it was a very serious situation, "especially for people who do not use the electronic funds-transfer system".

Mr Howlin said it was "entirely unacceptable, that the major banks, who now make profits of £1 billion in this economy and who should be somewhat more responsible after the findings of the DIRT inquiry, have a debt to this society".

He called on the Minister on behalf of the Government "that the economic might of the accounts in the control of the Government and Government agencies will be used as leverage to reverse this anti-social decision".

Mr Noonan asked the Government to ensure that post offices would be allowed to provide banking services, "particularly to those people who do not do business in the main banks at present", in view of the Flynn report, which showed the area to be on the verge of bankruptcy.

The Minister said arrangements had been made by the Department of Social, Community and Family Affairs with the banks to ensure its cheques were cashed.

Mr Caoimhghin O Caolain (SF, Cavan-Monaghan) said the banks' actions were disgraceful and another example of them "acting in a most arrogant and exploitative manner".

He called on the Government to publish legislation requiring the banks to contribute to the local post office network so that they could provide enhanced services. He called for legislation to protect employees of the State whose cheques were issued through the Paymaster General.

Mr Joe Higgins (Soc, Dublin West) said there was legislation. "The Government is not prepared to force the banks to cash the cheques of ordinary working people, just as it allowed them to close branches around rural Ireland."