The Rehab Group and the Health Service Executive have agreed to "engage intensively" over the next week, in a bid to resolve a funding row.

Rehab says it will not serve a 12-month notice of termination of its care services to the HSE tomorrow as planned, while the negotiations take place.

Senior representatives from Rehab held talks with Minister for Health Simon Harris and Minister of State for Disability Finian McGrath this evening, to seek an extra €2m in financial support.

Rehab has described the meeting as "fruitful."

Rehab and the HSE will meet again with the ministers on 15 May to assess if any progress has been made.

The Rehab Group had been set to give the HSE 12-months' notice of termination of its entire care services due to ongoing significant under-funding.

Rehab say that the cutting of care services would affect 3,000 people with disabilities who access Rehab's 147 services at 117 locations around the country.

This includes respite and residential services for 186 children, many with high-support needs.

It includes day services for more than 1,600 adults along with supported accommodation services, which allows hundreds of people to live independently in their communities, some after leaving decades of institutional care.

Rehab says there are a number of different reasons for this deficit. These include the higher care costs of people using the services as they age, the burgeoning costs of meeting new Health Information and Quality Authority and HSE regulatory requirements, which result in expenditure on extra staff; property upgrading coupled with a massive hike in insurance costs, as well as the removal of additional HSE funding to cover inflation in 2010.

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The Rehab Group says it has taken steps to address the rising costs. These include; the sale of its property in Sandymount, the closure of loss-making services in Ireland and Britain, the downsizing of staff numbers and salaries at its head office, and closure of the Group Defined Benefit Pension Scheme.

Speaking earlier today, Chairman of the Board of Directors of Rehab Group Jimmy Tolan said: "This situation can be reversed, the care services could be saved but only if we are provided with urgent additional funding to ensure that these services continue."

Mr Tolan added: "This is a sector-wide issue as outlined in the recently published report of the Independent Review Group on the voluntary sector, which proposed the Government bring forward proposals for dealing with financial deficits recorded by voluntary bodies over recent years.

"It is our profound hope that the vital care services which Rehab provides will continue, and will be saved, but this can only happen with an urgent intervention from the Minister for Health."

In a statement, the HSE said the Rehab Group is a key partner with the HSE in the provision of a range of services to persons with a disability across the country.

It said the Rehab Group and the HSE are engaged in a process in relation to the totality of services provided through the group.

As this process is not yet complete it would be in appropriate to comment at this time, the statement reads.

Additional reporting Tommy Meskill