Germany's finance minister is reported to have said that euro zone countries would be forced to come to the aid of a fellow member state if it encountered serious financial problems.
A report on the Reuters news agency said Peer Steinbruck had mentioned Ireland as a country in difficulty in remarks made to members of his SPD party at a conference.
This morning the German finance minister's office said the quotes in the Reuters report were taken in response to a question at a public discussion forum.
His spokesperson said the minister never wanted to raise a doubt over whether Ireland could cover its debt. She said there was no need for 'horror scenarios' and the minister did not want to paint the picture that Ireland was close to serious default.
The Department of Finance said it remained committed to restoring sustainability to the public finances over the five years to 2013. It said Ireland had a low debt level and that the General Government Debt to GDP ratio was 41% at the end of 2008, well below the EU average of 60%.
It added that the National Treasury Management Agency successfully raised €6 billion with a bond issue in early January, putting Ireland in comfortable position with regard to its 2009 funding requirement.
Mr Steinbruck's comments were seen as suggesting a shift in Germany's stance towards its euro zone counterparts, as it has previously come out against collective bail-outs and suggested that other countries in the euro zone who are experiencing acute financial problems have themselves to blame.
He was reported to have described Ireland as being in a 'very difficult situation'. Rating agencies have warned that Ireland's top AAA credit rating is at risk and Moody's said in a report last week that Ireland was among the most vulnerable nations with a top credit rating.