The Nevin Economic Research Institute think-tank has recommended that the Government raise €800m in October's budget.

The organisation has recommended measures to raise taxes and a stimulus package to boost the economy.

Improved tax revenues and austerity fatigue means the original plan to raise €2bn in taxes and cuts in the budget is almost certain to be dropped.

Sources close to Cabinet indicate the figure could be half that amount.

But it depends on the improved tax position holding up for the rest of the year.

Today the Nevin institute recommended a budget that would raise €800m.

It said there is no room for further public service cuts and instead opts for more taxes.

It said employers' PRSI should be raised as should levies on inheritance. It has also suggested a tax on wealth after account is taken of borrowings.

Nevin's report said doing nothing to tackle the deficit is not an option, adding that Ireland's debt is too high and public finances still need to be repaired. 

Meanwhile, Minister for Social Protection Joan Burton has said the suggested €2 billion in adjustments in the budget will not be required.

Ms Burton described as "austerity hawks" those who are in favour of introducing the €2 billion worth of tax increases and spending cuts.

She said recent analysis, carried out by the ESRI and the Nevin institute, shows that the Government can reach its deficit target by implementing relatively modest measures.