Minister for the Environment Phil Hogan has said plans to reform local government will save the taxpayer €420m over the next four years.
The proposals, called Putting People First, include the abolition off all 80 town councils, a 40% reduction in the number of councillors.
There will also be a cut in the number of regional authorities from ten to three.
Local authority services are to be funded through the local property tax, with strengthened audit committees.
A National Oversight and Audit Commission will scrutinise local government performance and efficiency.
Local authority managers are to be replaced by chief executives.
They will be responsible to the elected members in the same way as the chief executive of a company is to a board of directors.
The Government's document says that the role and functions of elected councils will be widened, with a greater involvement in economic development and enterprise support.
Town Councils will be replaced by new Municipal Districts, which will cover the entire county, being based on the main towns and their hinterlands.
Councillors will be elected simultaneously to the Municipal Districts and the County Council.
The document states that more power will be devolved to local level, with a substantial range of "reserved" functions at Municipal District level.
The city and county councils in Limerick and Waterford will be merged into a single authority, as will the two county councils in Tipperary.
Cork and Galway will retain city as well as county councils, while Dublin will keep its current four councils.
The measures will reduce the number of councillors from over 1,600 to 950.
The targeted voluntary redundancy scheme should see an estimated saving of €45m per year.
Minister Hogan has said that local authorities will have responsibility for the property tax and the amount that will be levied in each district.
Speaking on RTÉ's News at One, the minister said the Government remains committed to the principle that the money from the tax will be ring-fenced for use by local authorities.
He said the Revenue Commissioners will still collect the money, but local authorities will have discretion over the imposition of the new tax and the amount that will be charged.
He said international best practice suggested that local services should, as far as possible, be locally funded, and that was the rationale for the property tax.
He said the link between local tax and local service was severed by a government for electoral gain in 1977, a decision which he said led to much of the malaise in the local government system today.
Mr Hogan said that each local authority can in due course have a different level of property tax, though he said the timing of such a move would be a matter for Government.
He also confirmed that the power of councillors to overturn the decisions of planning officials will be abolished.
He said the decision had been taken in the light of evidence given to the Mahon Tribunal, regarding corruption in the planning process.
A directly elected mayor for Dublin is still a possibility, but only after voters in the capital are consulted in a plebiscite - a vote on a ballot question - to be held alongside the local elections in 2014.
Taoiseach Enda Kenny said the new local government plan was "one of the most radical, ambitious and far-reaching governance reform plans ever put forward by an Irish government".
He said councillors would have a stronger role on issues that matter to people, especially in economic development.
Mr Kenny said it would be up to local authorities to make the best of the new opportunities.
Tánaiste Eamon Gilmore said the Government was embarking on a clear path to local government reform.
He said the current system was undemocratic, unresponsive and does too little governing.
Mr Gilmore said Municipal Districts would replace the "patchy" system of Town Councils.
He said the structure would allow councillors to act at a District and a Council level.
Mr Gilmore said the new system would respond more quickly and effectively to the needs of people.
Plans criticised by some councillors
A number of councillors have expressed their concern at the abolition of town councils.
Bray Town Council Cathaoirleach Mick Glynn of Fine Gael said the reduction in the number of councillors may affect political diversity and accessibility.
Labour Councillor John Walsh, a member of Ballinasloe Town Council, said the move was a blow to local democracy.
Athlone Mayor Jim Henson said he has no confidence in the ability of Mr Hogan to introduce proper local government reform.
The Labour Councillor said what was being introduced was a European model system of representation that would bring elected representatives even further away from the people.
The Mayor of Waterford has said his city's status will be affected by the proposed changes.
Fine Gael Councillor Jim D'Arcy said Waterford will not be on a level playing field in terms of "city status" as it will not have the same resources as the likes of Cork or Galway and will be at a disadvantage.
He also said it is going to cost money in the short term and asked who is going to pay for the changes.
Fianna Fáil's Barry Cowen dubbed the proposals a wasted opportunity from a Government that had promised real reform, while Sinn Féin's Brian Stanley said the party would be studying the proposals.
Read a guide to 'Putting People First' here