Self-employed people will become eligible to claim a jobseeker's welfare payment from November, based on their social insurance contributions.
Minister for Employment Affairs and Social Protection Regina Doherty has said the initiative will provide an income safety net to thousands of small and medium businesses throughout the country.
However, the Irish Congress of Trade Unions has criticised the failure to increase the rate of insurance contribution by the self-employed, which remains at just over one quarter of that paid by employees.
In a statement, Ms Doherty described November's planned social insurance benefit scheme for the self-employed as an assurance to people setting up or running their own business that the State is there to support them if their business ceases operations.
Applicants will have to satisfy an as yet unspecified PRSI contribution condition and those who do not have sufficient PRSI contributions will continue to be able to apply for the means-tested jobseeker's allowance.
She added that the drafting of the necessary legislation has begun.
The Irish Congress of Trade Unions (ICTU) welcomed the change but it objected to the Government's failure to increase the social insurance contribution of the self-employed.
ICTU's policy officer policy officer Dr Laura Bambrick said they pay a 4% rate compared to a 14.95% contribution for employees.
She said that historically, the self-employed did not have access to the full range of social welfare payments, which was the justification for their smaller PRSI contribution. But she said this is no longer the case.
"Even before this new payment comes into effect, the self-employed now have access to 80% in value terms of contributory benefits while contributing a mere 27% of the effective rate of social insurance paid in respect to PAYE workers," Dr Bambick said.
She cited last year's survey of 20,000 self-employed workers conducted by Ms Doherty's department in which over four in five of all respondents (88%) said that they would be willing to pay a higher social insurance contribution in return for additional benefits.
"Officials estimate a 0.5% increase in the self-employed 4% PRSI rate would yield €77.5m per annum," the ICTU official said.
She accused the Government of ignoring the finding and instead introducing the new payment for the self-employed without a corresponding increase in their social insurance contribution rate.
Dr Bambrick said this is happening at the same time when the Government is making it more difficult to qualify for the full-rate old age pension and increasing the pension qualifying age to 68 out of their fears for the future sustainability of the Social Insurance Fund.
"(This) crystallises the unfairness and short-sightedness of Government thinking," Dr Bambrick added.