Banks have enough money to write off some mortgage debt after being bailed out by the taxpayer, Finance Minister Michael Noonan has claimed.
As the Cabinet met for the first time since the summer break, the minister said the Government would deal with the difficulties faced by struggling homeowners.
Although new figures reveal 55,000 householders are behind with their repayments for more than three months, Mr Noonan said it was a manageable problem.
"We're aware of the difficulty for some time, but of course because we recapitalised, the capital is in the banks to allow the banks write off some of that debt," the minister said.
"It's a manageable problem, but it's very onerous on certain individuals and the Government will deal with it."
The Government agreed to pump another 24 billion euro into the country's banks last March in a bid to win back confidence from international money markets, taking the total bailout bill to 70 billion euro.
Mr Noonan said the stress tests carried out at that time also focused on the value of mortgages and the borrowing plans.
Taoiseach Enda Kenny said the Government was acutely aware of the mortgage difficulties.
"I mean in all of these cases people borrowed money, banks lent money, because of circumstances sometimes outside their control, there are now difficulties," Mr Kenny said.
Figures released on Monday show more than 55,000 mortgages are now in arrears for more than three months.