The Health Service Executive has failed to meet its target of securing between 2,500 and 5,000 voluntary redundancies before the end of the year.
More than half of 3,700 staff who expressed an interest in voluntary redundancy or early retirement have changed their mind and decided to stay in their posts in the HSE.
This is a major setback to the HSE's plans to secure cost savings estimated at €200m annually from next year.
The Department of Finance had set aside a special fund of €400m to finance a voluntary severance and early retirement scheme targeted initially at managerial and administrative staff, and then at support staff like porters and caterers.
Initially the scheme attracted over 3,700 expressions of interest.
HSE sources had expected that up to 10% of applicants might change their mind after a two-week cooling-off period.
However, as of this evening, HSE sources say only around 1,700 are proceeding to take the redundancy package - a fall-off of over 50%.
Sources blamed a number of factors for the situation, including measures in the recent Budget, and the short time frame for making a decision.
It had been anticipated that the redundancies would lead to cost savings of around €200m a year.
However, it is impossible to quantify what savings will be secured now.
A final definitive number of applications will not be known until tomorrow.
The amount saved will depend on the combination of grades applying, their relative salaries and their length of service.
Compulsory redundancies in the health service are precluded under the Croke Park Agreement.
Asked whether the HSE would now extend the voluntary severance scheme to other grades to secure further savings, a spokesman said it was too early to comment on that.
