Taoiseach Enda Kenny has offered a full apology to whistleblower Sergeant Maurice McCabe.
As he faced down an attempt to collapse the Government over the handling of allegations of a smear campaign against the respected officer, Mr Kenny said the unfounded child sex abuse slur was appalling.
"I therefore offer a full apology to Maurice McCabe and his family for the treatment that was meted out to them," the Taoiseach said.
A judge-led tribunal is to be held into allegations that the top brass of the Garda orchestrated a black propaganda campaign against Sgt McCabe among journalists and politicians.
Hearings are to be held in public, with the inquiry expected to be extended to cover other Garda whistleblowers who have alleged victimisation.
Also, an independent, international policing expert is to be brought into the country to carry out a "root and branch" audit of the Garda, focusing on the administration, ethos and culture of the force.
The Independent Alliance said it had secured agreement for the oversight reform, despite the existence of the Garda Inspectorate.
Mr Kenny defended his minority coalition's handling of allegations of a sex abuse smear campaign following days of obfuscation over who knew the detail of the unfounded slur faced by the McCabe family.
"The Government's sole objective in responding to the recent protected disclosures has been and remains to get to the full truth," he said.
"The false allegations against Sgt McCabe are simply appalling. Sex abuse is the worst crime a person can be accused of."
Judge Peter Charleton, of the Supreme Court, is expected to lead the tribunal into the McCabe affair.
He previously worked as senior counsel to the Morris Tribunal, which spent years examining corruption and negligence among some gardai in Donegal in the 1990s.
Superintendent Dave Taylor made the allegation of a smear campaign in a protected disclosure last year.
He returned to work on Tuesday after being suspended for almost two years while a separate investigation ran into the alleged leaking of information to the media about the identities of Roma children taken into care over a suspected but unfounded kidnap concern.
Garda Keith Harrison is a second whistleblower who wants his case examined by Judge Charleton. He has been on extended sick leave.
He claims he and his girlfriend endured covert and overt Garda surveillance, referrals to Tusla - the Child and Family Agency - and that they were the victim of rumour, innuendo and malicious falsehoods.
Mr Harrison, who was previously nominated for a Scott Medal for bravery, was stationed in Athlone when he stopped a colleague on suspicion of drink-driving in 2009.
He also raised concerns about drug-dealing investigations.
In a statement through his solicitor, he claimed there is an "orchestrated system and culture" among senior management of the force that dictates the treatment of whistleblowers.
Mr Kenny also defended the handling allegations of bad policing made by Sgt McCabe which have been largely vindicated, including abuse of the penalty points system and negligence in the Cavan-Monaghan district.
The Taoiseach acknowledged mistakes over his recollection of what he knew and when about the McCabes bringing the file on the unfounded sex abuse report to Government.
Fianna Fail leader Micheal Martin, who was approached three years ago by Sgt McCabe about bad policing issues, said the Government's approach to setting up an inquiry into the affair had been appalling.
The opposition leader said the handling of the scandal had been "casual and incompetent" but his party would continue to prop up the minority government.
"The Taoiseach and his ministers failed to react with appropriate concern when deeply disturbing information was brought to their attention concerning the possible use of a state agency to terrorise an honourable servant of the state," Mr Martin said.
Mr Kenny was forced to call for a vote of confidence in his government after moves by Sinn Fein's Gerry Adams to bring down the coalition.
"The latest scandal to engulf the government results from Fine Gael's perpetual disgraceful handling of the campaign of vilification against Maurice McCabe and other Garda whistleblowers," Mr Adams said.
The Sinn Fein leader added: "Maurice McCabe's appalling treatment illustrates the absolute need for a culture of openness, transparency and accountability within our policing and justice systems and our political system."
Leo Varadkar, Minister for Social Protection, backed a full and unequivocal apology for Mr McCabe for his treatment by the Garda, state agencies and government departments.
"Maurice McCabe's family are the latest and perhaps the most grievous example of a society where so often truth, justice and accountability are denied," he said.
Mr Varadkar, tipped as one of two senior Fine Gael figures to take over from Mr Kenny, said the sergeant's actions had been more than distinguished but were heroic.
He did not use his speech to voice support for the Taoiseach but called on individual officers with knowledge of the smear campaign to come forward to the public inquiry
Mr Varadkar also said the McCabes should get answers to questions - including information about garda activity related to the false and unfounded report of sex abuse - before the tribunal sits.