The main opposition parties have claimed the Government's banking strategy is unravelling.

The Labour Party has said the Government's bank strategy is causing huge problems in the economy.

The party was responding to yesterday's announcement that the State is to take a 15.7% stake in Bank of Ireland on Monday instead of a €250m dividend it was due to receive today.

The European Commission blocked banks in receipt of State aid from making cash payments.

This forced the bank to give the Government shares instead of cash.

Labour's Finance Spokeswoman Joan Burton said it was a move towards nationalisation of the banks.

Ms Burton said: 'Once again in the banking crisis an important outcome has turned out totally different from what was promised by Brian Cowen.

'This grubby episode has been an act of shocking deception by the Government on the people of Ireland.

'This latest episode exposes the continuing shambles of current policy. Not one element of Government banking policy has yet shown any sign of success.'

A spokesperson for the Department of Finance said the transfer of shares to the Government insures the taxpayer gets a return for the State's €3.5bn investment in the bank.

He said the payment of a cash coupon or shares was set out last February when the Government announced they would put €7bn into Ireland's two biggest banks.

Fine Gael's Finance Spokesman Richard Bruton was also critical of the Government's banking policy and said it was 'falling apart at the seams'.

Mr Bruton said: 'They are literally left to make up policy as they go along. The taxpayer is left short and the shareholders in Bank of Ireland are left short as their share holding is diluted.'