The Taoiseach has told the Dáil that money cannot be borrowed to fund pay increases for nurses.
During Leaders' Questions, Mr Varadkar also apologised to patients for the impact of today's industrial action.
Mr Varadkar said while he could justify borrowing money for emergency measures to save jobs if required in the coming weeks, he could not borrow to fund pay increases.
"We are not in a position to borrow hundreds of millions to fund pay increases.
"I can justify borrowing hundreds of millions for emergency measures to save jobs if it comes to that in the next couple of weeks for one off capital projects that would be with us for 40 years… but I think borrowing money and funding pay increase with borrowed money is bad policy," he said.
However, Fianna Fáil leader Micheál Martin said there had been no proactive engagement on the part of the Government.
Mr Martin said the 11th hour activity was far too little too late.
He also said the Government was in denial about the recruitment and retention issues in the health service in particular in relation to nurses.
The Taoiseach said that health budgets were limited and any deal had to be fair to patients.
"I don't want to be put in the position where we have to divert money that is earmarked for new medicines or new technologies or new treatments for pay increases, I don't think that would be right," Mr Varadkar said.
However, Mr Martin said there was no limit to the budget for the National Children's Hospital and it was wrong to say a deal for nurses would be at the expense of medicines for patients.
Sinn Féin leader Mary Lou McDonald told Mr Varadkar to "get off the sidelines and engage with nurses".
The 24-hour strike by more than 30,000 nurses and midwives belonging to the Irish Nurses and Midwives Organisation in their dispute over pay and staff shortages began at 8am.
Minister for Health Simon Harris said the strike action was extraordinarily regrettable and is causing significant difficulty for many thousands of patients right across the country.
He said he knew it was a decision that nurses and midwives did not take lightly and that everyone appreciates the crucial role they play in the health service.
But he said the Government was bound by two very stark realities - firstly the Public Service Stability Agreement and secondly that of Brexit.
Mr Harris said there is an onus on all parties to really redouble their efforts to try and engage ahead of the next planned stoppage.