The Government has offered Fine Gael two extra chairs of Oireachtas committees, each worth €20,000 a year, in a bid to get the party to abandon its campaign of Dáil non-co-operation.
However, Fine Gael's willingness to accept an offer of four chairs, up from two in the last Oireachtas, has angered Labour, which has been given nothing by the Government.
Talks on Fine Gael's demands have continued over the last fortnight, following the main Opposition party's warning that it would not offer Dáil pairings unless it was treated better.
Despite having a considerable majority, the Government does require pairings from Fine Gael - whereby one of its TDs does not vote if a government member is absent - to carry out its business.
The Government Chief Whip, Tom Kitt, has now offered Fine Gael four chairs, including the chair of the Public Accounts Committee, which is held by tradition by the largest Opposition party.
The settlement was reached following a conversation between Taoiseach Bertie Ahern and the Fine Gael leader Enda Kenny last week, sources close to the discussions said last night.
During the last Dáil, Fine Gael TDs Michael Noonan and Bernard Allen chaired the Public Accounts Committee and the European Affairs Committee respectively.
However, the compromise reached with Fine Gael will annoy some Fianna Fáil backbenchers, who were hoping for some sign of preferment from the Taoiseach in what may be his last disbursement of jobs.
Some Fianna Fáil TDs, including one minister, are understood to have quietly complained on the margins of the Fianna Fáil parliamentary party about any concessions to Fine Gael.
The chairs of the new committees and the full list of membership are to be put to the Dáil tomorrow week, according to a government spokesman last night.
During the initial round of talks, Fine Gael argued that it should be entitled to five chairs, while Labour should have two, under a D'Hondt-style sharing system, similar to that used in the Northern Assembly and Executive.
However, the agreement has infuriated Labour whip, Emmet Stagg, who said that Labour "had made the same arguments about proportionality" that Fine Gael had made.
"If they are making the argument that proportionality should apply to them, and it should, then it should also apply to us," he told The Irish Timeslast night.
Fine Gael and Labour had not presented a joint proposal to the Government, but it had "tick-tacked" before each went separately to the Government Chief Whip.
During the last Dáil, Labour had one committee chair. Under a system whereby it got two chairs, then Labour would also have two vice-chair posts, two convenors and eight extra committee places.
In its original proposal, the Government offered Fine Gael just two chairs out of the 22 to be formed next week - even though Fine Gael now has 20 more TDs.
In retaliation, Taoiseach Bertie Ahern was told that he and senior Ministers would no longer get Dáil pairs unless they could show that they were away on actual government business.
Relations between Fine Gael and, in particular, Fianna Fáil have become quite raw over recent months, with the major Opposition party believing that it is being treated with disrespect.
Mr Ahern's decision to approach directly Labour TD Brendan Howlin with an offer to become Leas Ceann Comhairle, rather than speak to the main Opposition leader, irked considerably.
