The Taoiseach made an "honest error of judgement" in accepting €50,000 from friends, Tánaiste and Minister for Justice Michael McDowell said this evening.
The recently elected Progressive Democrats leader said Mr Ahern should repay the money with interest and that his party would remain in Government.
Breaking a silence he has maintained since Mr Ahern confirmed he had received payments while minister for finance in the 90s, Mr McDowell said he had no reason to doubt Mr Ahern's honesty.
Mr Ahern admitted yesterday to receiving IR39,000 (€50,000) from 12 friends in late 1993 and 1994 which he said was to help him pay costs associated with his legal separation from his wife, Miriam.
He said there was no impropriety involved and that his friends had insisted he take the money and subsequently refused to accept repayment despite a number of offers from Mr Ahern.
In a statement issued this evening, Mr McDowell said: "Although at all levels of Irish society there are and will be many cases where friends and acquaintances come together to help a friend in financial and personal difficulty, the fact remains that in the sphere of public affairs, an individual is not as free as others to accept such well-intentioned assistance.
"It seems to me that the Taoiseach should probably have declined such help even in the very difficult personal circumstances which he faced in 1993. However, I think it fair to say in the light of what the Taoiseach has stated that accepting such help was an honest error of judgement and was neither dishonest nor corrupt."
Mr McDowell had been under pressure to comment and was baited in the Dáil today by Fine Gael leader Enda Kenny who said the Tánaiste's "silence was deafening".
Mr McDowell released his statement after a meeting of the parliamentary party this evening convened to discuss the matter.
He said his party had refrained from making substantial comment on the issue to afford the Taoiseach time to assemble relevant information to account publicly for the revelations.
The payments from Mr Ahern's friends were "well-intentioned" but "ill advised", Mr McDowell said.
"In the light of what the Taoiseach has said about their identity and of pre-existing relationships of personal friendship and trust, and in the light of the scale of the individual payments, it is reasonable to accept that the motive for the payments was benevolent and was not intended to compromise, to be corrupt, or to obtain improper influence or reward."
Mr McDowell added that he had worked with the Taoiseach over many years and looked forward "to continuing to work with him in implementing the Programme for Government".
Opposition parties have insisted the payments - or the interest on the payments - amounted to a gift that should have been declared.
A complaint to the Standards in Public Office Commission is being considered by Mr Kenny who also want clarification on whether Mr Ahern had any responsiblities in relation tax on the payment.