The Minister for Communications, Dermot Ahern, is to direct Comreg to introduce competition on phone line rentals by the end of March.
The move follows another increase in the cost of domestic line rentals from eircom.
The minister said the measure would cut line rental prices to consumers by allowing telecoms companies to compete against eircom for line rental.
Referring to the latest price increase, Mr Ahern said public anger was understandable because the hike was well ahead of inflation and had been levied on that part of the service where there was no competition.
In a reference to the holding in eircom retained by the Communications Workers Union, he said the interests of Irish consumers were not served by leaving them at the mercy of private shareholders including those representing employees.
