The European Commission has approved the Government's National Broadband Plan, saying it complies with EU state aid rules.
The decision means one of the final hurdles preventing the State from signing the contract with the preferred bidder, National Broadband Ireland, has been overcome.
The Commission said the €2.6bn of public support will result in high-speed broadband services being brought to consumers and businesses in areas with insufficient connectivity in Ireland.
"The National Broadband Plan in Ireland is expected to address the significant digital divide between urban and rural areas in Ireland, enabling Irish consumers and businesses to benefit from the full potential of digital growth," said Competition Commissioner Margrethe Vestager.
"This will help households and businesses in areas of Ireland where private investment is insufficient."
The Commission assessed the planned measures under the EU state aid rules, including broadband guidelines dating from 2013.
It decided that the scheme's "positive effects on competition in the Irish broadband market" outweigh potential negative effects brought about by the public intervention.
The plan aims to bring download speeds of at least 150Mbps and upload speeds of 30Mbps to parts of the country where commercial operators claim it is not commercially viable for them to offer a service.
Services will be offered on a wholesale access basis to all operators and this will incentivise private investment in the provision of high-speed internet services in the areas concerned, the Commission said.
"The Irish authorities have developed a comprehensive mapping of available infrastructure and carried out numerous public consultations in order to determine the target areas," it stated.
The decision has been welcomed by Minister for Communications, Richard Bruton.
"Today's decision from the Commission allows the government to proceed towards signing the National Broadband Plan contract with National Broadband Ireland which will commence the roll out of 147,000km of fibre to homes, farms, businesses and schools across our country," he said in a statement.
Department sources were unable to say how soon it would be before the contract is signed.