The taxpayer is understood to have forked out 4.4 million euro to refurbish the luxurious home in Ottawa.

Fine Gael said the figure was outrageous and unjustifiable and said work on the 24,000 square foot building included a whirlpool, sauna and a chandelier that cost 20,000 euro.

Minister Micheal Martin said it was important Ireland be properly represented overseas.

"The embassies play a very key role actually, both in helping to win inward investment and in supporting the work of Enterprise Ireland and IDA by utilisation of the embassies for economic purpose," he said.

More than 15 million euro has been spent over the past two years on refurbishments to diplomats' residences worldwide.

Mr Martin told RTE's This Week that the amount spent in Canada, where Ambassador Declan Kelly lives, was a very significant sum.

"There will be very little enhancement or upgrading of facilities in the next couple of years because we don't have the same resources that we had in previous years," he added.

Fine Gael's foreign affairs spokesperson Billy Timmins said there was no way the amount could be justified while the country is mired in recession.

"Those bearing the brunt of the recession at home are entitled to feel infuriated at the Government's decision to prioritise funding for a 'palace' over special needs assistants, hospital wards and social welfare payments," said Mr Timmins. "This is nothing less than an insult to every single taxpayer," he added.