A review into the Government’s Strategic Communications Unit recommended that the unit be "wound down" and the Department of the Taoiseach should revert to a reformed Government Information Service.
This service will have a smaller budget, less staff and a more limited role than the SCU.
The review was conducted following criticism of the unit’s handling of advertisements placed in local newspapers promoting the Government’s development plan - Project Ireland 2040
It was carried out by Martin Fraser, the Secretary General of the Taoiseach's department.
The review found that there was no attempt made by the unit to place Fine Gael candidates in newspaper advertorials.
However, the review said that this did occur and was "unsatisfactory, and gave rise to legitimate concern and criticism".
Mr Fraser said dealing with "intense political and media interest in the work of the SCU has come to dominate much of the time of the staff of the unit and of senior management".
He said the SCU has been the subject of 203 Parliamentary Questions, 63 Freedom of Information requests as well as a number of other debates, Leaders Questions in the Dáil, and a large number of press queries.
"This is now actively damaging our ability to effectively focus on our strategic priorities, such as Brexit, Northern Ireland, the economy and improving public services" he said.
"It has also given rise to an inaccurate perception of what the department's actual role and priorities are within Government".
"This is not sustainable for us if we are to successfully discharge our core functions"
He said he could not ignore "the strongly expressed views of Opposition leaders who may serve in a future Government, including the recent vote of Dáil Éireann calling for the disbandment of the SCU."
In a statement tonight, the Government said it accepted the recommendations of the review.
Earlier, Taoiseach Leo Varadkar told a Cabinet meeting that the SCU will be "wound down" by July, in accordance with Mr Fraser's recommendations.
It is understood staff will be absorbed into existing information services.
Opposition parties said the advertisements were made to look like regular news articles.
However, the Government insisted that the unit had no influence over editorial style.
It employed 15 people and had a budget of €5m.
Sinn Féin deputy Dáil Leader Pearse Doherty said the winding down of the Strategic Communications Unit was a vindication of his party’s decision to call for its disbandment in the Dáil last week.
The Donegal TD said that the €5 million spin machine was a shameful, callous, and deceitful propaganda project.
He said the SCU was an exercise in vanity which exploited the media and which has been beset by questions, both moral and ethical.
Pearse Doherty also said the Taoiseach should appear before the Public Accounts Committee to answer what he said were the many outstanding questions surrounding the SCU.
Deputy Catherine Murphy of the Social Democrats welcomed today's announcement.
On RTÉ's Drivetime programme, she said the unit was seen as the Taoiseach's personal PR agency and it blurred the lines between politics and the civil service.
Additional reporting Martina Fitzgerald