The Government has said it will need to bring in measures totalling €15bn over the next four years to meet a 2014 target for cutting the Budget deficit agreed with the European Union.
The figure of €15bn is double the one set out in last year's Budget.
The Government must bring the deficit down to 3% of economic output by 2014 to come back in line with EU rules.
Mr Lenihan said EU Monetary Affairs Commissioner Olli Rehn will be in Dublin in early November to discuss the four-year framework plan with the opposition and the social partners. It is thought likely the plan will be formally published shortly after Commissioner Rehn’s visit.
He also told journalists that the plan assumes an average growth rate over the four year period of 2.75%.
In a statement, the Government said the main reasons for the significant increase were lower economic growth prospects at home and abroad and the higher cost of paying interest on our debt.
The Government said the scale of the measures needed for next year and a breakdown for the remaining three years would be announced in the proposed four-year plan, expected to be published next month.
The Government said it realised that the spending cuts and revenue raising measures needed would have an impact on people's living standards, but warned that it was 'neither credible nor realistic' to delay these measures.
'To do so would further undermine confidence in our ability to meet our obligations and responsibilities and delay a return to sustainable growth and full employment in our economy,' the Government said.
Finance Minister Brian Lenihan said a significant frontloading of the €15bn correction will be required in 2011, but precise figures will not be given until the middle of next month.
He acknowledged the Government is concerned about the impact of the multi-billion euro correction, but said it has to happen to put the public finances back on a sustainable footing.
Minister for Tourism and Sport Mary Hanafin has said no department would be ring-fenced from cuts in the upcoming Budget.
She acknowledged a cut in child benefit was possible.
However, she said it was difficult to tax and added: 'There was no way of identifying who the high-earning families who got child benefit were.'
The Government's statement came after the Cabinet held a day-long session to discuss the Budget and the four-year economic plan.
Ministers met for over three hours at Farmleigh House in the Phoenix Park last night.
The meetings took place ahead of this week's Dáil debate on the economy.
The Government has warned that in addition to increased taxes, there will be spending cuts in health, social welfare and education.
Ministers arriving for this morning's session were keen to stress that fairness would be top of their agenda when framing cuts.
However, Government Chief Whip John Curran admitted that the social welfare bill would have to be reduced to meet targets.
Minister for Communications, Energy and Natural Resources Eamon Ryan said there is no denying the difficult choices that have to be made.
Mr Ryan said the Government's job is to get a Budget that works and that gets Ireland out of the economic difficulties that it is in.
Earlier on RTÉ's Morning Ireland, Minister for Community, Equality & Gaeltacht Affairs Pat Carey said that nothing can be ruled out.
Mr Carey said no decision has been taken on reducing the Budget deficit to 10% by next year.
He said the Government's focus was to meet the 2014 target of 3% and that every area of expenditure would have to be examined.
Last night's meeting at Farmleigh was delayed to allow Minister Lenihan return from a meeting with EU Commissioner Ollie Rehn.
The subsequent discussions focussed on preparations for the Budget according to a spokesman, but Europe and the markets may be more interested in the four-year plan now due in three weeks' time.
That will chart the pattern of painful cuts across that period and will be the focus of this week's debate in the Dáil.
Final decisions on where the axe will fall in December's Budget will not be taken until tax receipts for this month are to hand.
Briefings of the Opposition finance spokespersons by officials in the Department of Finance resumed this afternoon.
Sinn Féin's Arthur Morgan had an hour-long meeting this morning, while Labour’s Joan Burton arrived at the department at lunchtime. Fine Gael's Michael Noonan was briefed by Finance Minister Brian Lenihan this afternoon.
This is the third time Opposition spokespeople have met with Department of Finance officials.
Elsewhere, Davy Stockbrokers has lowered its forecasts for the economy this year and next year, warning that Budget measures are likely to affect consumer spending.
It expects gross domestic product to rise by just 0.3% this year, compared with its previous forecast of 0.8% growth.
Davy also expects gross national product, which excludes profits from multinational companies based in Ireland, to fall by 1.5%, compared with its previous forecast of a 1.2% fall.