The Government remains adamant it is not seeking financial assistance from abroad despite continued speculation that talks are under way on a bailout.

A spokesman for the Department of Finance said ongoing contacts continue at official level with international colleagues in light of current market conditions.

He said these discussions focussed on the upcoming Budget and the four-year plan.

RTÉ News understands there have been contacts throughout the day among a number of capitals on the possibility of a rescue bid for the Irish economy.

An EU source told RTÉ: 'All the main players have been involved, the European Commission, the Irish, the Germans, the IMF, the ECB. Everyone will be watching how the bond markets react tomorrow.'

From the point of view of the single currency, agreement by Dublin to a bailout could calm the markets.

But it would lead to significant damage for the country's reputation and an enormous loss of political control over Ireland's financial affairs.

Meanwhile, the Minister for Justice has described as 'fiction' the speculation that Ireland is about to seek financial aid from the European Union.

Dermot Ahern told RTÉ's The Week in Politics that 'nothing is going on at the direction of Government in relation to this.'

He said that because of the general issue in relation to the euro currency, the Government would be part of any discussions with their European partners.

Minister Ahern said the Government would remain calm and decisive and deal with events as they happen 'day by day'.

Earlier, Minister for Enterprise, Trade and Innovation Batt O'Keeffe said the Government was not under pressure to apply for a bailout from the EU's emergency fund.

Speaking on This Week, Mr O'Keeffe said the Government was confident that Ireland could manage the economy and achieve its targets, and it was not going to give over to anyone else - what he called - Ireland's very hard-won sovereignty.

Mr O’Keeffe said Ireland was well financed up to the middle of next year and also has a pension reserve fund of €25bn.

He added that the International Monetary Fund clearly stated two days ago that it believed that Ireland can manage its own affairs.

Mr O’Keeffe’s comments came after the Department of Finance had to again insist last night that Ireland is not already involved in talks on an application for emergency EU funding.

The BBC, Reuters news agency and international finance website reported that talks on an EU bailout have taken place.

One report on Bloomberg claimed European central banks put pressure on Ireland's Central Bank to seek a bailout during a midday conference call.

The BBC and Reuters claimed Ireland was seeking a bailout in the region of €45- €90bn.

The head of the IMF, Dominique Strauss-Kahn, has said Ireland can manage its economy on its own.

Speaking on the sidelines of an Asia Pacific summit in Japan, Mr Strauss-Kahn said Ireland's difficulties had been principally caused by one bank and were very different from those of Greece whose economy faced deep-seated problems.