The Government was accused of indecision, secretiveness, "political cuteness" and misinformation in its handling of the regionalisation debate.

Opposition deputies sharply criticised the Taoiseach for his failure to inform the House that the Regional Affairs Commissioner could not confirm to him that additional structural funds would be available even if the Government adopted a regionalisation policy. They were commenting following the report in yesterday's editions of The Irish Times detailing a private note of a meeting between Mr Ahern and Ms Monika Wulf-Mathies in October.

Fine Gael's finance spokesman, Mr Michael Noonan, said the debate on whether to adopt a regionalisation policy was important but was now "taking place under a cloud, a cloud of indecisions and misinformation". It was "simply an exercise in political cuteness".

As the House went into debate "the Government has not yet put its cards on the table. We do not know what strategy the Government intends to follow, and all members of the Government from the Taoiseach down have deliberately sought to disguise their intentions in this matter."

Referring to the meeting between Ms Wulf-Mathies and Mr Ahern, Mr Noonan said: "Not only did the Taoiseach not inform the House of the Commissioner's views, but he proceeded to imply that extra structural funds would be automatically available if the regional strategy were followed."

"[Fine Gael] believes that national policy must be framed so that all areas of the country and persons who live in them may prosper equally. At present, despite the boom conditions in the economy, there are great disparities of wealth, income and living standards in the country," he said.

Opening a debate on regionalisation, Mr McCreevy said the criterion for Objective 1 eligibility was for a region to have a per capita income in GDP terms below 75 per cent of the community average and Ireland's GDP per capita now well exceeded that figure. Accordingly, Ireland as a whole no longer qualified for Objective 1 status.

Mr McCreevy said if a part of the State were to qualify for Objective 1 as a result of the proposed reclassification, this would not mean the rest of the State would be treated any less favourably than it would have been anyway.

"If such an approach were put in place, the region with a per capita income below 75 per cent of the EU average would qualify for full Objective 1 status, while the rest of the State would still be a region in transition for Objective 1 funding."

Ireland, said the Minister, last year received about £2.5 billion of EU receipts broken down as £1.5 billion under the CAP and £980 million of structural and cohesion funds. Our EU budget contribution was £514 million, leaving Ireland as an EU net beneficiary to the extent of 4.1 per cent of GDP.

But on present indications and trends, and assuming enlargement went ahead as planned, Ireland was quite likely to become a net contributor during the financial period beginning in the year 2007, Mr McCreevy added.

Mr Derek McDowell, Labour's finance spokesman, also sharply criticised the Government's "secretive" approach to EU regionalisation and questioned the benefits of regionalisation.

"How can we possibly ask others to invest in our future if we refuse to do so ourselves?" he asked, pointing to the decision last week by the Minister for Finance to bank £1 billion of taxpayers' money to reduce the national debt.

"Government TDs have been falling over themselves with enthusiasm in an effort to extract a few million pounds from the German taxpayer while our own Minister for Finance is taking £1 billion of Irish taxpayers' money and refusing to spend it on anything."

Mr McDowell said the Government was "due to run a current Budget surplus of £2,500 million this year. This is equivalent to the entire expected take from structural and cohesion funds over the next seven years. It is argued that regionalisation will allow us to increase our share by up to £120 million or roughly £20 million a year over the next financial term."

This was one-fiftieth, or 2 per cent, of the general Government surplus for this year alone - the Minister underestimated the tax take by close to £1 billion, or £20 million per week.

Mr Michael Ring (FG, Mayo) warned that the Government should abide by its commitment to grant Objective 1 status to the west of Ireland. In a fiery speech, he said the rest of the country got Objective 1 in the last round of structural funds because of the west of Ireland.

He asked why the "begrudgers", including some in his own party, were against the West. "The west of Ireland is entitled to Objective 1 and I hope that this Government has the courage to make the right decision."

He said 40,000 farmers had marched in Dublin last week "but I can tell you there'll be 120,000 people from the west of Ireland outside these gates if we don't get Objective 1. We're only asking for fair play. It's now or never for the survival of the west of Ireland."

Mr Proinsias De Rossa, the Democratic Left leader, said the debate had been depicted as "the West versus Dublin or, even more misleadingly, the West versus the rest". It was not about that, he said.

"It is about recognising that poverty and disadvantage is a countrywide problem and that it is just as severe in Ballymun as it is in Belmullet."

He called for a change in the criteria used in determining eligibility for the qualification for the maximum level of aid, an alternative which had not been seriously considered.

"I believe that this is the approach that should have been adopted and that Ireland has a very strong case for a new system of assessing variations in wealth between Ireland and the rest of the EU and within different parts of the country."

He believed that splitting the State into two regions would have "at best a token impact on the global figure the country is likely to receive in structural funds".

He said the measure to determine qualification for Objective 1 status, gross value added (GVA), was a "totally unreliable measure of regional income in the Irish context and significantly distorts the real picture of disadvantage".

What were known as "overhead subsidies" such as most farm income supports and headage payments were not included in GVA and this distorted the picture.

Replying to the debate, the Minister of State for Finance, Mr Martin Cullen, said it was not for Ms Wulf-Mathies to encourage or discourage the Government on regionalisation and "quite properly the Commissioner refrained from doing either. As she made clear, the issue is an internal one."

The Government had no choice on the criteria used for the designation of regions for Objective 1 or any other purposes, he added.

"GDP is the measure accepted across Europe and there is simply no way we could gain acceptance for a range of other statistics however compelling in their way," he said in response to Mr De Rossa's demand for a change in criteria.