A proposal to increase defence spending by €500 million a year will be brought to Cabinet next month for approval.
The increased resources is in line with the recent report of the Commission of the Defence Forces which delivered a withering assessment of the current situation.
It concluded that a “business as usual” approach would leave the Defence Forces “without a credible military capability to protect Ireland”.
It recommended the Naval Service should be upgraded to a navy and its establishment strength should be doubled to 2,044. The Air Corps should be renamed the Air Force with the minimum of a primary radar system and a strategic lift capability.
Speaking following a ceremony at Cathal Brugha Barracks to mark the centenary of its handover from British to Ireland forces, Mr Coveney said Ireland is an outlier in terms of defence spending. It typically spends a third of what other countries do on defence.
Currently Ireland spends 0.3 per cent of its GDP on defence in comparison with an average of 1.3 per cent in other similar-sized countries in Europe.
In 2019 Ireland had the lowest ratio of general government expenditure on defence to GDP across all EU Member States.
"We are working on the basis of that recommendation [of the Commission], but also in the context of what is happening in Ukraine at present," Mr Coveney said.
He will be meeting with the three party leaders in the next 10 days to brief them on the proposals.
“This is going to be a reforming, growth story for the defence forces,” he said. “I am keen to make the Defence Forces an employer of choice.”
Mr Coveney said Ireland will not be joining Nato "any time soon", but he acknowledged that discussion on greater defence co-operation with the EU and Nato have substantially increased across the media and social platforms since the Russian invasion of Ukraine.
“We have to recognise there is a significant difference between what we demand of our defence forces and the resources that we give them.”
Hundreds of serving and former members of the defence forces attended the ceremony since the British troops marched out of what was then known as Portobello Barracks and were replaced by Irish ones. In 1952 the barracks was renamed after Cathal Brugha, the Minister for Defence in the first Dáil. Cathal Brugha Barracks now includes the military archives and a purpose-built visitor centre.
The head of the Military Archives Comdt Daniel Ayiotis recalled the history of the barracks which stretches back to 1810.
Portobello Barracks was where the pacifist Francis Sheehy Skeffington, Thomas Dixon and Patrick MacIntyre were summarily executed by a mad British officer John Bowen Coldhurst during Easter Week 1916.
During the Civil War the barracks became the general headquarters of the National Army and the war was prosecuted from there.
It was also from Portobello Barracks that Michael Collins departed on his final journey to Beal na Blath in August 1922.