Fianna Fáil leader Micheál Martin said it was "wrong and inappropriate" for party Senator Terry Leyden to use Oireachtas stationery to send out invitations for a function.
The Roscommon-based Senator has cancelled an event in his family pub on Wednesday night, which is designed as a replica of the Dáil bar.
Mr Martin said Senator Leyden accepted it was wrong and was paying back the money involved.
It was due to be attended by the Fianna Fáil leader and members of the party.
In a statement today, Senator Leyden said that when he sent out the invitations using Oireachtas envelopes he believed this was permitted within the rules.