The Government is expected to defer plans for a new prison at Thornton Hall in Co Dublin as part of a range of capital expenditure cuts due to be outlined tomorrow.

The proposed amalgamation of DIT’s colleges to a single campus in Grangegorman in the capital is also likely to be shelved.

Ministers will announce reduced capital expenditure plans at noon tomorrow, with €750m expected to be cut across a number of projects.

Earlier it was revealed that the Government’s plan to co-fund the A5 motorway project in Northern Ireland was also facing postponement.

The work was to be funded by the Government and Northern Ireland's power sharing executive and was part of the St Andrew's Agreement in 2006.

Although the motorway runs through Northern Ireland, it is often used by citizens of the Republic and is an important part of the island's road network.

The expected cost is around £800m and the Government was due to provide 50% of this.

Another high-profile project likely to suffer from cuts is Metro North, the planned underground light rail system which would like Dublin Airport with Dublin city centre.

In the Dáil today Minister for Transport, Sport and Tourism Leo Varadkar avoided giving specific details but said it was hard to undertake significant capital spending while also trying to avoid tax rises and social welfare cuts.

When asked about funding for the A5 motorway Minister Varadkar said: “The commitment of €560m over the next four or five years is an enormous commitment and a difficult commitment to honour given the financial difficulties we are facing.”

The opposition claim that cuts in the capital budget will slow recovery and reduce the potential for job creation, particularly in the construction sector.