The Department says the new system will increase the transparency of the allowances system.
Read the Department's statement
Under the new system, expenses will be published monthly, payment of allowances will be verified by attendance at Leinster House and expenses claims will be audited.
TDs and Senators will be required to 'sign-in' at Leinster House and provide receipts for claims above a certain level.
The new system, which is to be introduced at the beginning of March, replaces a number of allowances that have been paid up to now.
A new Travel and Representation Allowance will be paid to TDs who attend Leinster House for Dáil or Committee sittings for at least 120 days a year.
They will lose 1% of that allowance for each day below the threshold they miss.
The allowance ranges from €12,000 for a Dublin-based TD, to €37,850 for one living at least 350km from Leinster House.
The other part of the new system is a Public Representation Allowance, covering expenses such as office costs, phone bills and newspaper advertising.
TDs can claim up to €15,000 in unvouched expenses under this heading.
They can claim up to a maximum of €25,700, but have to supply receipts for the entire amount and may be subject to audit.
