Minister for Finance Brian Lenihan has been defending the Government's proposals for an inquiry into the banking system.

Briefing journalists this evening, Mr Lenihan said one of the main reasons for having an initial 'scoping exercise' followed by a Commission of Inquiry is that it provided a means to resolve any disputes over facts.

He said if disputes over facts arose, in the first instance, at an inquiry by a Dáil committee, there was a real danger these would break-down in a political partisan manner.

The Minister cited Labour's Joan Burton saying that in the Dáil she accused him and Fianna Fáil of being part of a 'toxic triangle' with builders and bankers and he questioned how she or someone else of that view could be impartial at a Dail committee.

Referring to the cut-off point of 30 September 2008 for the inquiry Mr Lenihan said if there were banking transactions after this date, relevant to the how the regulatory system failed, he would review that aspect.

But he insisted the inquiry would not go beyond this date in any general sense.

The Minister said it was an inquiry into the origins of the banking crisis not into how the Government set about resolving that crisis, or continuing Government policy.

He also indicated his preference, at this stage, would be for an overseas person to head up the Commission of Inquiry.

Minister Lenihan said by the time the Commission commences its work he expects many of the issues involving re-capitalisation of the banks and NAMA will be dealt with.

Meanwhile, Opposition parties have criticised Government plans for a Commission of Investigation into the banking crisis, claiming it will be a secretive whitewash.

However Taoiseach Brian Cowen told the Dáil they were proposing a 'tried and trusted method of investigation', which would deliver its report by the end of this year.

The Commission, which is to be established by the end of June, will have six months to investigate the causes of the systemic failures of Irish banking.

Its work will be preceded by two reports - one by the Governor of the Central Bank, Patrick Honohan, on the performance of the financial regulatory system, and another by a recognised expert, or experts, who will conduct a preliminary investigation into the causes of the banking crisis and the lessons to be learned from it.

These reports are to be delivered by the end of May, and will inform the terms of reference of the Commission of Investigation.

An Oireachtas Committee is to meet Mr Honohan and the independent experts before they begin their work, and will consider their findings.

Green Party leader John Gormley denied that the terms of the inquiries into the banks represent a rebuff for his party.

Mr Gormley insisted there would be a substantial public element to their proceedings, with an Oireachtas committee holding hearings to consider its findings.

He said because such a committee could not make findings of fact a statutory inquiry was needed. He added that when it makes its report the Oireachtas committee will be able to summon witnesses and review its conclusions.

Labour Party Finance Spokesperson Joan Burton accused the Government of pulling the wool over the eyes of the taxpayers, who were looking for answers about what happened in the banking system.

Deputy Burton described the proposed inquiry as a clever means to sideline the issue until the other side of the election is reached.

She said it would be remiss to expect the Government to 'leap with alacrity' to find out what happened in the banking system in light of its response to the flooding and the recent cold snap.

Sinn Féin's Finance Spokesman Arthur Morgan dubbed the inquiry a 'whitewash before it even started'.

He said the preliminary reports were token clippings to be followed by an investigation to be conducted by a Government handpicked committee.

He predicted that the findings would be hugely sympathetic to the Government. He asked why the Oireachtas Finance Committee was not being engaged to do what he said was its day job. He also criticised the Green party who he said had caved in on the inquiry.

Fine Gael leader Enda Kenny accused the Minister for Finance of sidelining the Oireachtas in its banking inquiry proposals.

Speaking in place of the party's Finance spokesman, Richard Bruton, who had a prior engagement, Mr Kenny said the state of the banking system had as much to do with the failure of Government policy, as it did with greedy banking.

He said it was convenient to blame those in the banks and the difficult international economic climate.

He said the Government was proposing to amalgamate the Central Bank and the Regulator, without first finding out what went wrong in regulation.