Minister for Finance Michael Noonan has said that the €10bn earmarked in the European Union-International Monetary Fund programme for recapitalising the banks would probably not be enough.
He added that bank stress tests could reveal a capital shortfall which, alongside the sovereign debt, could lead to a situation where sustainability was 'doubtful.'
On the margins of a meeting of EU and eurozone finance ministers in Brussels, Mr Noonan said he sought assistance from European Central Bank president Jean-Claude Trichet to help with a potential shortfall in both the liquidity and capital situations in the banking sector.
Mr Noonan told reporters that he sensed a 'willingness to help' by his eurozone partners and the ECB, and said that an ECB delegation would be in Dublin on Wednesday for talks with the Department of Finance.
He expected the shortfall to be revealed by the results of bank stress tests, which will be published by the end of March.
The Government is seeking a medium-term solution from the ECB in order to end a process of fortnightly injections of emergency liquidity to Irish banks.
It also wants the restructuring of the banking sector to be carefully paced so the capital position of the banks will not be undermined in a firesale situation.
'We need a longer deleveraging period,' he said.
Mr Noonan criticised the outgoing government for its decision not to input the €10bn set-aside in the EU-IMF programme to recapitalise the banks.
At the time, the outgoing Finance Minister Brian Lenihan said he did not have a mandate to do it, since an election campaign was under way.
Mr Noonan claimed it was not done because the previous administration 'knew it wasn't enough.'
He also said Ireland's negotiating position on securing a lower interest rate on the bailout was made more difficult by the potential problems arising from the bank stress tests.
Minister Noonan said the tests should have been done much earlier by the previous government.
When asked if his former colleague John Bruton had made Ireland's position difficult by his criticism last week of the ECB's role in supervising the banking sector during the boom, Mr Noonan said that the former Taoiseach and EU ambassador to the EU was an 'experienced public person,' but he was 'not acting on behalf of the government. This was his own personal view.'
The minister again rejected any notion that Ireland would alter its low corporate tax rate as a quid pro quo for an interest rate reduction. Mr Noonan said that moves towards a common consolidate corporate tax base were out.
'We're quite open to talking about the bailout package. We're looking for assistance.'
Following the heads of government of the eurozone agreement on Friday to make the €440bn rescue fund (EFSF) bigger and more flexible, Mr Noonan said it would be helpful if the new status of the fund allowed it to buy government bonds.
'The NTMA could sell some bonds on the market, and others to the fund, so it would become a kind of underwriting agency to help Ireland get back to the market.'