Minister for the Environment Alan Kelly has written to the chief executives of the four Dublin local authorities warning them not to introduce any new housing standards which would adversely affect the viability of commercial developments.
In a letter, co-signed by Minister of State Paudie Coffey, the councils are urged to focus on formulating plans which would attract investors to develop housing for the rental market.
The four Dublin local authorities are currently formulating development plans for coming years, which will include building more homes in the capital.
Last year 3,000 homes were built, but there is a need for double that amount in 2015.
In the letter the ministers warn the councils that the viability of new housing construction in Dublin is fragile.
They urge the councils to develop plans for housing in suitable locations at affordable prices, which would attract investors to develop homes for the rental market.
However, the ministers also warn against the introduction of any additional requirements in relation to the standard of housing or ancillary services which would adversely affect the viability of commercial investment in new housing developments.
The Green Party has raised concerns about the letter, saying the short-term interests of builders are being prioritised over the long-term interests of home owners who want decent standards of houses to be built.
A Green Party Councillor has accused Minister Kelly of asking local authorities to choose between having good housing regulation or having housing at all.
Speaking on RTÉ's Morning Ireland, Green Party Councillor Ossian Smyth said Dún Laoghaire-Rathdown County Council would not be changing its policies.
"He doesn't have authority here to stop us, we are a local authority and we are making our plans for the next 30 years for the type of houses that people have to live in
"It's not right for him to say 'Here I've got this short term solution that might knock a few quid off of a house in the short term and then I'll leave your constituents to live in these houses for the next 30 years perhaps cold in their houses, perhaps houses that are deficient in their use of water or energy,' I think that's completely unfair,” Mr Smyth said.