The Tanaiste, Ms Harney, has played down suggestions that she may take legal proceedings against clothing giant, Fruit of the Loom, to recoup some of the outstanding grant aid owed to the government through contractual agreements.

Ms Harney was speaking at the launch of the Donegal Employment Initiative in Buncrana, Co Donegal, yesterday in the wake of the threat to 700 jobs at the company. The Minister said only once before had the Government taken a private company to court to retrieve grant aid and she did not foresee this happening on this occasion.

"Although I was not satisfied with the outcome of the talks with the company last Monday, I am confident we can retrieve this grant aid," she said.

She added, however, she was not pleased that she had received confirmation from the IDA locally that it will now be at least three weeks before Fruit of the Loom will make an announcement on redundancies.

The Task Force itself will be headed by local county manager, Mr Michael McLoone, and will include a number of local industrialists and members of SIPTU and IBEC.

Mr McLoone said the immediate priority of the body was to seek alternative employment for workers made redundant.

"I believe that the views and recommendations of the Task Force will not fall on deaf ears in Dublin or elsewhere as have happened so often in the past.

Mr McLoone refused to put any time scale on the work of the new body, but said he would be reporting to the Tanaiste on a regular basis. He said he was placing a special effort in promoting Donegal to the mid-range investment companies, which could provide employment outlets catering for between 50 and 250 jobs. To do that, however, the perception of international companies towards the north-west must be changed, he added.