Taoiseach Enda Kenny has been accused of reneging on election promises not to cover some speculative debts of toxic bank Anglo Irish as a 700 million euro bond is repaid.
Mr Kenny said he did not approach bosses of Anglo Irish Bank, now known as the Irish Bank Resolution Company (IBRC), to buy back the bonds at a discount earlier this year. "I didn't instruct the bank to buy back the bonds at a reduced rate," he said.
Shane Ross, independent TD, claimed the bonds - first issued to finance the rogue lender in 2006 months before the property bubble burst - could have been bought back by the state at 60% of the original value. He claimed investors and speculators have made a 70% profit on the back of Irish taxpayers.
The Anglo debt, to unsecured and unguaranteed bondholders, was repaid amid pressure from the European Central Bank that Ireland must ensure all bank debts are covered.
Sinn Fein, which protested outside Leinster House over the repayment, and TDs from the United Left Alliance, walked out of the Dail in a symbolic protest against the debt deal.
The Taoiseach insisted the repayment had been a trade-off to secure a cheaper interest rate for Ireland's 85 billion euro bailout from Europe and the IMF.
Mr Kenny said covering Anglo's debts was about maintaining Irish integrity. He said: "We made a case to the European Central Bank... it was not possible to get the consent and agreement of the ECB. I admit that it has not been possible for this Government to unravel the agreement that was made.
"We have pursued an alternative policy of having the debt burden reduced and if the Government had defaulted on these bonds, we wouldn't have had the support of our colleagues to get the 10 billion reduction in interest rates."
Fianna Fail leader Micheal Martin said: "Every member of this Government was elected on a commitment not to pay the full 700 million euro the Anglo bondholders are being paid. You can dress up your position in all the brazen words you want, you can't wriggle out Taoiseach of your own clear words."
Sinn Fein TD Gerry Adams called for a motion in the Dail to instruct Alan Dukes, chairman of the IBRC, that the money not be paid. "I'll give you an explanation why it's still being paid - the 'Golden Circle' is still in place," Mr Adams said.