President Mary McAleese has signed the Credit Institutions (Stabilisation) Bill following a three-hour meeting of the Council of State.
It will not now be referred to the Supreme Court to have its constitutionality tested.
The Council of State, which advises the President, met to consider the constitutionality of legislation covering the financing and restructuring of the Irish banking sector.
Last week, the Dáil and the Seanad approved the Credit Institutions Bill, which gives the Minister for Finance new powers to restructure the banks.
Opposition parties raised concerns about the powers being given to the minister.
The European Central Bank also has concerns, saying the Bill was 'insufficiently legally certain' on some key issues relating to the euro system.
The Council of State has 22 members, including the Taoiseach, the Tánaiste, two senior judges, the Ceann Comhairle of the Dáil, the Cathaoirleach of the Seanad, and the Attorney General.
Former President Mary Robinson, five former Taoisigh and two former Chief Justices are also members, as are seven people appointed by the President.
This is the seventh time that President McAleese has convened the Council of State.
The Cabinet held a regular weekly meeting at Government Buildings.
On their way into the meeting, neither Brian Lenihan nor Micheál Martin would comment on this afternoon's meeting of the Council of State.
Mr Lenihan said the European Central Bank has not sought substantial changes to the legislation.
He said they were closely consulted about the Bill and the bank usually offers opinions on legislation.
