When Mary O'Rourke is under fire, she fights clever - and rough. Within 24 hours of unveiling her plans for Dublin's Luas light rail system, she was in the Dail lampooning her opponents as political pygmies. "Thomas the Tank Engine comes to Dublin," jeered Ruairi Quinn. "You're a fine tank yourself!" she retorted. Trevor Sargent of the Green Party came, the Minister judged, from "the party of eco-warriors who lie in trees and shrubs waiting for people".

Probing O'Rourke on her budgetary layout for the rail project, the Opposition demanded to know what she meant by £400 million "plus". "What does plus mean?" they chanted.

"Plus means extra," she replied, languid and wide-eyed. "You could have looked it up in the dictionary. . . Plus means extra, Nora [Owen], E-X-T-R-A."

Wednesday's Dail question-and-answer session ended in high farce and no light had been thrown on when the project will start, how long it will take to complete, or how it will be costed. Nobody was aware that the plan really is to take the underground from "somewhere around the bottom of Harcourt Street", close to the location of the College of Surgeons. It will run under the Temple Bar area and emerge at the garage in Broadstone.

But the long story as to how Luas devolved to a suassios state remained somewhat a mystery.

As far as the Opposition was concerned, it was quite simple. The Government had surrendered shamelessly to vested interests. The Green MEP, Patricia McKenna, declared the decision was "based entirely on the influence of a small number of businesses in the city centre" - a declaration denounced as nonsense by the Government.

As far as the Government was concerned, a number of political and economic considerations came into play. It was not today or yesterday that Bertie Ahern noticed that traffic congestion and pollution were becoming big political issues in his hometown; Fine Gael and the other Opposition parties had cottoned on to the political implications of the crisis.

Figures for the future made glum reading. By 2000, something like one million heavy goods vehicles would be using Dublin Port while, out at the airport, approximately one million passengers were passing through every month; within a decade, that figure would rise to 20 million a year.

Pragmatically, something had to be done. Fifties-style services were still serving 21st century needs. Politically, the Government had to exert some muscle to calm the frayed nerves of hundreds of thousands of daily commuters.

Colleagues of Ms O'Rourke say she was not fixated on the underground option but the Fianna Fail side of the coalition was positively gobsmacked at the intensity of the Progressive Democrats' determination to put the rail line underground in the city centre.

"They seemed to see going underground as a cause celebre," remarked one Government source.

Sources say that the Progressive Democrats dug their heels in so hard in insisting on the underground section that Ms O'Rourke's original memorandum to Government was withdrawn. Her plan to announce a decision as soon at Atkins was published had to be shelved for a week. (She had told the Dail on two occasions that she would take Atkins's advice).

With the Progressive Democrats holding out for the underground option, Mr Ahern asked Ms O'Rourke to chair a special Cabinet sub-committee to consider Atkins before coming back to Government with proposals last Tuesday afternoon.

Mary Harney, and her party colleague in Cabinet, Bobby Molloy, attended two subcommittee meetings. The Chief Whip, Seamus Brennan and Minister for the Marine, Michael Woods, also took part. Mr Ahern, who, sources say, was largely behind the extension of the Luas plan to the Northside, was also involved in rounds of discussion that stretched over the weekend.

These discussions led to shaping the contents of Ms O'Rourke's memorandum which went through the full Cabinet on Tuesday largely unaltered and, of course, included the underground stretch.

The Cabinet broke into roughly two camps of argument: the minimalists who wanted to stick with the Atkins recommendation, take the EU's £114 million funding, and stay overground; and those with the longerterm perspective who wanted to take the underground option.

"There was argument, long but not bitter," says a Government source.

Deep reservations about the financial fallout of the underground section were voiced by Charlie McCreevy. Since funding is to come from the capital spending programme, he was most concerned at the lack of detail, the absence of specific route plan and geological studies.

"It did not break down along urban-rural lines at all because the non-Dublin ministers have concerns at the effect of this on their own budgets," another source said.

As the Progressive Democrats lobbied within Government, pressures were also being exerted from outside.

Dublin Chamber of Commerce is no slouch when it comes to protecting its members' interests. And its members are no slouches in identifying those interests. The Dublin Chamber has 3,000 members, incorporating the wealthiest and most thriving names in Irish business: 700 of their firms are located in the Dublin 1 and 2 postal districts - the centre of town.

The chamber's 1997/98 Transport Committee is an impressive list of well-known names drawn from the public and private sector. It includes David Palmer, managing director of Independent Newspapers; Alfie Kane, chairman of Telecom Eireann; John Callaghan, First National Building Society; John Kenna, IBEC; Henry O'Reilly, from the chartered quantity surveyors' firm, O'Reilly Hyland Tierney; and Howard Knott, Lys Line (Ireland) Ltd.

As far as the chamber was concerned, the idea of a full on-street system was a turkey. In his heyday, Michael Lowry had produced a limited version of light rail for the capital: it would be all on-street, a notion that alarmed the chamber and sent it into action.

It commissioned its own study and, in 1996, the Light Rail Transit Dublin Business Community Study was produced by Lansdowne Market Research. In overall terms, there was a generally favourable disposition among business towards the concept of light rail transit with firms anticipating benefits from reduced traffic congestion and speedier access to the city centre.

"However, underlying this are relatively weak levels of specific knowledge and elements of scepticism and, perhaps, anxiety," the report said.

Noel Carroll, chairman of Dublin Chamber of Commerce, says the vested interests of his members were of paramount importance and could be protected with the inclusion of an underground section of rail-line through the city centre.

"What's wrong with that?" asks Mr Carroll. "Their vested interests are totally legitimate. . . There is a real world here. It is a business world with investment and staff. . . We did not herd sheep down Kildare Street. We represented our members in a professional fashion."

In other European cities, like Strasbourg, 30 per cent of businesses along their light rail route systems closed down. Dublin businesses did not want the streets of the city ripped up for years to install the on-street service. The city deserved a look at the underground option and when the chamber got to meet the Minister for Public Enterprise last year, it told her so.

But sirens went off in the chamber's ranks when the Atkins report on the underground option was published 12 days ago. Businesses like Arnotts, Clerys and Independent Newspapers contacted the chamber.

Within days, James Ruane, the chamber president, wrote to Mr Ahern and Ms O'Rourke stating that he did not share the report's conclusion that the cheaper surface option should be favoured.

In summary, the letter suggested that the Government "seriously consider the underground option and base its judgment on the broader issue of the economic well-being of the city, both in the short term (less disruption and damage) and long term (greater flexibility, integration and potential for expansion)".

When Mr Carroll heard the Cabinet's eventual decision - that Dublin would have a partial underground system - he felt one particular emotion: relief. Coincidentally, Mr Ahern had been invited, for the following night - Wednesday - to address the chamber at its headquarters in Clare Street, just down from the Dail, to accept a copy of its glossy action plan for Dublin transport.

Back in Leinster House, the anger of the Opposition knew no bounds, particularly that of Labour's public enterprise spokesman, Emmet Stagg. He went on a solo run, sources say, without leadership consent, to proclaim that it would be inconceivable for Labour to go into government with anyone who did not agree to reverse the government's decision.

For now, the heat is off the Government as the next phase in the lengthy process belongs to Judge Sean O'Leary who has been appointed to head the public inquiry into Luas. This process itself is fraught with difficulties and even assuming it runs smoothly, it could take months - well into next year - before it reaches a conclusion.

Even then the prospect of endless legal challenges from various interest groups cannot be dismissed, a point alluded to by Ms O'Rourke on the night she introduced the plan.