Economist Colm McCarthy has said Ireland needs to secure relief on "a very big slice of the total" bank debt in order to make the economy financially sustainable.

Mr McCarthy said it was "very striking" that there had been a specific mention of Ireland in the communiqué following last week's EU summit.

He added that it included some phrases that may turn out to be really valuable about equal treatment for similar cases.

"There's no point getting debt relief of €5bn-€10bn.

“It has to be a very big slice of the total to be sufficiently effective as to restore the solvency of the Irish State."

Minister of State Brian Hayes said the Government wants the negotiations on bank debt to be resolved by October.

He said the Department of Finance has been working on different options and Minister for Finance Michael Noonan will present several design options to his European colleagues.

Mr Hayes said some of the ideas "have been teased out with colleagues across the eurozone. Now the hard work starts.

“And I think the important thing here is that a very hard period of negotiations lies ahead. We want these issues resolved by October. We want to ensure the maximum result for this country."

However, Mr McCarthy described the Government's proposed timeframe as "possible but unlikely".

He predicted that it would take six months to work out the details of the agreement.

Fianna Fáil's Timmy Dooley said the least Ireland would expect is to get full reimbursement of any money spent on recapitalising banks.

"That's the obvious follow-through from the separation of bank recapitalisation from the sovereign, which now appears is going to apply to Spain and any other country hereafter that will require bank recapitalisation," he said.