The Cabinet has authorised the Department of Transport to allocate an extra €36m to CIE immediately to protect public transport services.
As yet, it is unclear to what extent rail and bus services have been at risk to warrant the extra allocation.
CIE's constituent companies Irish Rail, Bus Eireann and Dublin Bus have all been hit by falling passenger numbers and rising fuel costs.
The companies point out that the government subvention has also been cut in recent years - though Department of Transport sources noted that subvention reductions have also affected other agencies reflecting the reality of the economic recession.
Last week, RTÉ news revealed that 17 Irish Rail staff who were due to take redundancy or early retirement were told within days of their scheduled exit dates that they could not leave.
At the time, a spokesperson denied suggestions that the company did not have the money to pay the redundancy lump sums of up to €130,000.
However, he said the deferrals until later in the year were being implemented to ensure a "phasing of funding for cash flow management" - and to preserve continuity of service.
Irish Rail is currently implementing a cost reduction programme including 450 redundancies over four years, and significant changes in terms and conditions.
Negotiations on restructuring are continuing at Dublin Bus and Bus Eireann - and include significant changes in overtime, rosters, sick leave and other conditions of employment.
In a statement from Department of Transport, it said that ministers had secured the support of the Cabinet in raising CIE's 2012 subvention to €278m, the fourth highest level ever allocated.
"This intervention by the Department will ensure that CIE remains adequately funded for the immediate future and can continue to provide a sufficient service to the travelling public," Ministers Varadkar and Kelly stated.
