Civil servant Robert Watt has been appointed Secretary General at the Department of Health by the Cabinet.
However, it is understood that Mr Watt is set to waive a proposed salary increase for what was described by two Government sources as the "time being".
The annual salary for the new secretary general had been set to increase to €292,000.
Mr Watt has occupied the post on an interim basis, on a salary of €211,000, for several months.
He had been Secretary General of the Department of Public Expenditure and Reform. The DPER had previously confirmed that Mr Watt had no input into the sanctioning of the €292,000 salary.
In a statement, Minister for Health Stephen Donnelly confirmed the appointment.
Also in the statement, Mr Watt said he would be waiving the increase in pay "given the current difficult economic conditions the country faces.
"It had always been my intention that, if I were to be appointed to this role, I would waive this increase until the economy begins to recover and unemployment falls."
Tánaiste Leo Varadkar said it would be a matter for Mr Watt to decide whether he would accept the €81,000 pay rise.
He said it was the Cabinet's firm view that a role such as this warrants a salary similar to that of the Health Service Executive CEO or any other semi-State body.
Sinn Féin's spokesperson on Public Expenditure and Reform, Mairéad Farrell, described the waiving of the €81,000 salary increase as a cynical move, and said the temporary waiving should instead be made permanent.
She said the waiving of the increase indicates that it was never needed, and that there was an applicant willing to take the position at the previous level of pay.
Social Democrats co-leader, and PAC Vice Chair, Catherine Murphy said that Mr Watt "should permanently waive the €81,000 pay increase that accompanies his new job".
"I welcome the decision of Mr Watt to waive this extraordinary salary increase but any waiver should be permanent, not temporary," she said.
The salary was signed off by the Minister for Public Expenditure and Reform, Michael McGrath, with agreement from the Taoiseach, Minister for Health and Government Secretary General, Martin Fraser.
In a written answer to a Parliamentary Question, Minister McGrath explained to Deputy Mattie McGrath that the Secretary General role at the Department of Health involved the management of a department of nearly 600 staff, with 19 non-commercial bodies, including the HSE which employs over 125,000 people, and a health budget of €22bn.
Robert Watt has been a prominent figure in Government for some time, often finding himself at the centre of news stories.
Two years ago, he was embroiled in a row over claims that he said members of the Public Accounts Committee were "a mob" that needed to be controlled. Mr Watt said he did not remember saying this.
He has previously criticised the National Broadband Plan, arguing that the Government was spending too much on it.
In 2015, he was one of the two final candidates considered to lead the Central Bank in 2015, before being edged out by Philip Lane, then an economics professor at Trinity College.
Last year Robert Watt was appointed as an independent director of the Football Association of Ireland.
Additional reporting by Tommy Meskill