The staff association representing rank-and-file soldiers has called on the Taoiseach to sack the Minister for Defence over his handling of the closure of six barracks.
The soldiers' conference passed a motion calling for Mr Smith's dismissal immediately after he addressed them on the effect of the large hearing claims bill facing the State and the need to restructure the Defence Forces.
Also yesterday, the Minister confirmed that an investigation carried out by the UN into the suspected illegal sale of duty-free liquor and tobacco by military personnel in Cyprus had produced "preliminary indications" that Irish soldiers may have been involved. He is travelling to the UN Headquarters in New York next week and said he would be pursuing the matter.
Mr Smith warned that the Defence Force's continuous 20-year participation in peacekeeping in Lebanon could end unless "significant problems" could be overcome. He said later he meant that the Defence Forces had been in Lebanon "a long time" and there could be opportunities to serve in other missions.
However, military sources pointed out that the remarks come just a week after the High Court awarded a substantial compensation claim to an officer who was found to be suffering from posttraumatic stress disorder as a result of being in a fatal shooting incident in 1980 in Lebanon.
The Minister said the stress claim "added an absolutely new dimension" to the issue of military compensation claims but he said the early indications were that there would not be an "avalanche" of stress-related claims.
The State is facing 13,540 claims for hearing disability and 800 other injury claims from soldiers. So far, £53 million has been paid out in hearing cases.
Yesterday's session of the PDFORRA (Permanent Defence Forces Other Ranks Representative Association) conference was extraordinary. There was organised disruption at the start of the Minister's address with 18 delegates - three from each of the six closed barracks - walking out to sustained applause. Before he gave his address, Mr Smith was described as "incapable" and "egotistical" in a speech by the PDFORRA president, Mr Pat Grogan.
The Fine Gael spokesperson on Defence, Ms Frances Fitzgerald, who attended the conference, said the walkout was "extremely disturbing" and that the Minister must change his approach.
Mr Smith said later he was "not really interested in this type of character assassination".