The Taoiseach has signalled that the Government will spend more on the poor and will give tax cuts to benefit the lower paid, but has allayed PD fears of a pre-election "spending spree".
As the Tánaiste, Ms Harney, warned yesterday that her party would leave Government if there were a significant shift in economic policy, Mr Ahern insisted there would be no such change of direction.
Ruling out a repeat of the spending increases that marked the run-up to the 2002 general election, he made it clear that budget spending increases will be targeted on the elderly, the poor and the disabled, along with a widening of tax bands and tax allowance increases.
As tensions between the coalition parties appeared to ease, it emerged that they are almost certain to face a united "Rainbow" opposition in the next general election campaign.
The Fine Gael and Labour Party leaders announced they would do "whatever it takes" to agree a joint platform before the next election to put to voters.
Mr Enda Kenny and Mr Pat Rabbitte launched a power-sharing agreement yesterday between their parties on Westmeath County Council in Mullingar. They said it was "a good indicator of how enhanced co-operation among the main opposition parties could produce a meaningful and decent alternative to the failed policies of the present Government".
The Green Party is expected to announce later this month that it is also likely to be part of an alternative government alliance.
Fianna Fáil's deputy leader, Mr Brian Cowen, immediately challenged Fine Gael and Labour to give details of their policies. However, sources in both parties said yesterday they would not negotiate such policies until they were much closer to the next general election.
The Taoiseach made his remarks on the Government's future direction yesterday in Inchydoney, Co Cork, at a meeting of his parliamentary party.
The Tánaiste warned yesterday that if a change of image for Fianna Fáil brought a fundamental change of policy, her party would leave Government. She said she believed the coalition could last its full term, and she hoped the Cabinet reshuffle at the end of this month would make the Government seem like "a new Government", involving "a new group of people".
However, she added: "If you're asking me the question, will we stay in Government regardless of the policies being implemented, of course we won't."
She said they would not accept a "tax and spend" approach or a pre-election "spending spree".
Talk of a change of image has caused unrest in the PDs. Mr Ahern's comments will ease these fears.
Saying that "fundamentally there is no change in the Programme for Government", he kept some room for manoeuvre by saying: "The Programme for Government is the template that we work from. Of course, circumstances sometimes change."
He said the question of indexing tax bands - a tax change which benefits the lower paid - was something the Government would "have to look at". This contrasts with the past emphasis on cutting tax rates, which disproportionately benefits the better paid.
"Primarily, we have people in society that need help, the old, the disabled, people who are marginalised," he went on. "When we have spare resources we like to target those in a meaningful way, in an efficient way." Mr Ahern said recent job creation had created significant extra tax revenue.
"So when resources permit you can do more in health expenditure, you can do more with medical cards, disabilities, providing that you have the resources to do and there isn't recourse to borrowing."