The Department of Finance has confirmed that Ireland's debt is €3.6bn lower than previously thought due to an accounting error.

Broadcaster TV3 earlier reported on the error, which saw a payment between State agencies being counted twice.

A Department spokesman said that as a result of a "re-classification", the country's debt to GDP ratio would be 2.3% lower.

It is understood the development occurred as result of double-counting.

In a statement, the Finance Department said the National Treasury Management Agency recently made both the Department and the Central Statistics Office aware that there was a change in their relationship with the Housing Finance Agency (HFA) that has an impact on the accounts of the two entities.

It said that previously the NTMA had acted as agents for the HFA.

In a statement, the NTMA said: "The Department of Finance is responsible for the calculation of General Government Debt.

"The NTMA raised the issue (of potential double counting) with the Department of Finance on a number of occasions from as far back as Autumn 2010."

Since late 2010 the NTMA have loaned directly to the HFA and these loans appear as assets in the NTMA accounts and liabilities in the HFA accounts.

“The liabilities of the HFA are included in general Government debt; the corresponding assets of the NTMA have been included in the 'liquid assets' of the NTMA, which are also part general Government debt - effectively a double count,'' the statement added.

“Removing the impact of this double count reduces the estimate of 2010 general Government debt by €3.6bn or 2.3% of GDP,” the statement concludes.