Plans for a universal, one-off electricity credit of €100 per household will go before the Cabinet on Tuesday.
Government sources have confirmed to RTÉ News that a memo will be presented to ministers ahead of an expected announcement early next week.
The proposed credit is aimed at helping households through the current international spike in energy prices.
According to figures released by the Central Statistics Office yesterday, electricity, gas and other fuels are up 29% on an annual basis.
Under the plans the €100 would be deducted at sources from domestic bills.
The scheme will not be means tested. Every domestic electricity consumer will receive the subvention, but businesses will not.
It is expected to cost the Exchequer around €170m, and would come from the budget of the Department of Environment, Climate Action and Communications.
The move will require new legislation to be passed by the Oireachtas and this will be introduced to the Dáil in the new year.
It means consumers will not get the reduction until at least February.
Rising energy prices push inflation to 20-year high
Sinn Féin had called on the Government to ease the squeeze on household finances with finance spokesperson Pearse Doherty telling the Dáil yesterday that there should be a direct subvention or a VAT cut.
Speaking on RTÉ's Today with Claire Byrne, Minister for Finance Paschal Donohoe said the Government is working on a number of options to try to ease the burden of rising living and energy costs for people.
He said the Government fully appreciates the challenges faced by many due to the rising cost of living, adding: "What's really important is that we can do something that is fast."
Mr Donohoe said targeted measures, including changes in the tax and the social welfare system, have been made to assist people with rising costs all year long.
He said resources are concentrated where they are needed most, but that this issue is one that will affect everyone.
"I still think it's important to act and make a difference to the majority," he said.
A research and policy analyst at Social Justice Ireland said the cost of living has been rising for 18 months and is mainly driven by transport, housing and utilities.
Michelle Murphy said this mainly affects those on fixed incomes, welfare, or low incomes.
She said there were no increases to core social welfare rates in Budget 2021, so those on fixed incomes have had a year of increased prices have had to make cutbacks elsewhere to deal with that.
Speaking on the same programme, Ms Murphy said there will be a €5 welfare increase in 2022, but not everyone is entitled to measures like the fuel allowance.
She said there are low income workers and families "up and down the country" who are dealing with an over 5% increase in the cost of living.
Additional reporting Sandra Hurley
