Every sheep and goat in the EU will have to be implanted with an electronic microchip by the end of 2009.
The decision on electronic identification follows the EU Commission's report on the implementation of electronic identification of sheep and goats, published in November 2007.
Irish and British ministers worked to delay until December 31st, 2009, the implementation of the system which will cost flockowners 30 times more than the existing tagging system.
Farm organisations here and in Britain, the largest exporter of sheep meat in the northern hemisphere, have opposed the mandatory micro-chipping of sheep on the grounds of cost.
They have also maintained that there is no evidence that the new system will be any better than the existing one.
Sheep farmers did not have to tag sheep in Ireland or Britain until after the outbreak of foot and mouth disease in 2001.
The lack of proper identification of animals at that stage aided the spread of the disease which cost both economies dearly.