A senior civil servant appointed non-resident ambassador to the Vatican is to open talks with the Pope's representatives on sharing an embassy building with other diplomats assigned to Rome.
Tanaiste Eamon Gilmore said the option of using one site to house staff liaising separately with the Holy See and the Italian government will be on the agenda.
David Cooney, secretary general of the Department of Foreign Affairs and one of the country's most senior civil servants, will be responsible for the delicate discussions.
"If the Vatican relaxes the requirement about having two separate buildings then we will look at the Vatican situation again in that context," the Tanaiste said.
"We have appointed a non-resident ambassador to the Holy See... he will be able to carry that discussion forward with the Vatican authorities."
Mr Gilmore said the Government was standing by its decision to close the Vatican office and embassies in Tehran, Iran, and Timor Leste in South East Asia, but would be flexible if authorities in the Holy See looked at other options.
"When we made the decision we made two things clear: One was that the issue of the Vatican and indeed other embassies would be revisited as our financial circumstances improve and change and secondly this requirement that the Vatican has had up to now that you have to have two separate buildings - if they show flexibility on that then we will show flexibility," he told RTE Radio.
"When our ambassador David Cooney has his credentials submitted and when the Vatican makes the arrangements to receive those credentials and he is then in a position to have discussions with them, we will carry that forward."
Archbishop of Dublin Diarmuid Martin suggested the Holy See embassy would reopen in a leaner way and that it would not be long before other arrangements were found.
Mr Cooney recently attended a Vatican ceremony where Pope Benedict put his mark on the church's future and elevated 22 clerics to the role of cardinal.