Wicklow TD Joe Behan has resigned from the Fianna Fáil party in protest at the Budget.
Tonight the Taoiseach Brian Cowen said he will set up a process in the coming weeks with Irish Medical Organisation to try to change the structure of the new medical card scheme.
In a letter to the Taoiseach, Mr Behan said he was appalled at the Government's decision to end universal medical card provision for people over 70 years of age.
He wrote to Brian Cowen and said that he had come to the conclusion that 'enough is enough'.
Mr Behan has accused the Cabinet of being out of touch with ordinary members of society.
Speaking on RTÉ's Six One News, Mr Behan said his decision to resign from Fianna Fáil had been very difficult but he felt he had no choice.
He also said he could not support the proposals to cut school class sizes.
Mr Behan said Eamon de Valera and Seán Lemass would be turning in their graves at the decisions made in the past week.
He said he felt insulted by comments yesterday by Tánaiste Mary Coughlan that TDs should not criticise Budget decisions. Mr Behan said he baulked at anyone telling him he could not speak his mind.
Mr Behan said he would not consider any approach from other parties.
Click here to read Mr Behan's resignation letter
Speaking on RTÉ's Nine News, the Taoiseach said he was not backing down on the medical card issue but was taking a pragmatic response to public concerns.
He said he hoped the new agreement would allow more people to keep their medical card and that he was confident that he would get cooperation on the issue.
Mr Cowen said he believed that with good faith the Government could still make the savings needed and also get a more favourable outcome for medical card holders.
But he said automatic entitlement was not sustainable into the future and in the current economic climate.
He added that the change to the system had been brought about in good faith because of the rising cost of the scheme but that he knew it would be a difficult decision.
But he said he did not want to go back to deferring difficult decisions. The Taoiseach said he has so far made no official contact with the IMO.
However, Fine Gael Leader Enda Kenny TD has said Mr Cowen had created even more confusion for the elderly.
Mr Kenny said: 'I'm astounded by this intervention by the Taoiseach. The only credible and decent option open to the Government is to reverse this decision.
'His performance on the news tonight simply created more confusion over the Government's botched Budget and medical card fiasco.'
Fianna Fáil backbench revolt brewing
The Government is facing a major backbench revolt over its decision.
The Deputy Leader of the Green Party, Mary White, has said the Government's plans needs to be readdressed.
She said the medical card plan seemed rushed and she wanted to send a very strong message from the Green Party.
She also said 'this is not a pulling out of Government issue'. She said Fianna Fáil must take a look at the measure and come back to the Green Party with an update.
When asked if her call had the support of the two Green ministers she said 'no decisions are made without the entire parliamentary party'.
Dublin South TD Tom Kitt has said the decision should be changed sooner rather than later as it was simply not going down with a core section of the electorate.
The former minister and Government Chief Whip called on the medical profession, who he said had done well out of the scheme, to make a contribution to solving the problem.
Asked to compare backbench unease over the decision to other controversies, the former whip said it was in a class of its own.
Donegal North East TD Jim McDaid said the Government had tried to target the medical profession through the over-70s.
Dr McDaid called on his own profession to forego the extra payments they receive for treating the over-70s for a period of three years as a gesture to help the national finances.
He also raised doubts about the Government's prospects of defending the move against a legal challenge and said he had never seen an issue to generate more upset in his 20 years in the Dáil.
Meanwhile, it is understood that some Fianna Fáil backbenchers are currently seeking a special meeting on the issue. A number of them have called on the Government to reverse the decision.
Fianna Fáil backbencher Noel O'Flynn has told RTÉ News that he would not be able to support the Social Welfare Bill if it includes the removal of the automatic right to a medical card from the over-70s.
He said he would be speaking to his party organisation in Cork North Central over the weekend, but he had put the Chief Whip on notice that he would have great difficulty with the measure.
Independent TDs Finian McGrath and Michael Lowry have said they presented a set of alternative proposals to Health Minister Mary Harney in relation to the scrapping of the over-70s medical card.
Asked whether he would continue to support the Government, Mr McGrath said he was prepared to wait until he saw the legislation before making that decision.
Fine Gael's Health spokesman Dr James Reilly has on called on Government deputies to support the Fine Gael motion next Wednesday to rescind the decision.
Means tests to be complete by New Year
People over 70 affected by the medical card changes can expect to receive a means assessment document from the Health Service Executive in the first two weeks of November.
Eligibility requirements explained
Ms Harney last night announced an increase in the income cut-off point for qualifying for the card.
However, Ms Harney's department said the change would not significantly increase the number of people eligible for a full medical card.
The announcement that the eligibility threshold for a full medical card was increased by €40 to €240 per person per week was more clarification than climbdown.
Age Action said that even under the higher limits, anyone on the basic State pension will still fail the means test if they have any other income.
Of the 140,000 people who got a card automatically when they turned 70, only about 15,000 will retain it, while 35,000 will get a GP card and another 70,000 will get a health support payment.
There are another 215,000 people over 70 with medical cards, who qualified for it through a means test and they will not be affected by the Budget move.
The people affected are due to receive the assessment form in the first fortnight in November.
They will be asked to return it within two weeks so their status can be decided in time for the New Year.
The HSE Information Line 1850 24 1850 is open from 10am to 6pm.
