Minister of State Michael Healy Rae has called for a "common-sense approach" when it comes to short-term letting restrictions for larger Irish towns that would be considered "tourist hotspots".
Earlier this week, the Government approved plans for restrictions on short-term lettings in towns with a population of more than 10,000.
The changes are expected to take effect in May next year when a Fáilte Ireland register for short-term lettings will be up and running.
The move will effectively ban planning permissions for commercial short-term lettings in cities and many towns around the country.
Kerry TD Healy-Rae said that for larger towns that are popular with tourists such as Killarney, which has a population of around 14,000, the issue will have to be looked at again.
Speaking on RTÉ News at One, he said: "It will have to be looked at for places like Killarney and other towns like that.
"Surely there can be some way found that towns like that will be able to continue giving the excellent service they are, and there are other examples throughout the country, whether that would be 15,000 or whether it would be 20,000.
"I can understand why that has to happen because this Government has to do everything in its power to tackle the need for urgent housing to be made available for all people, in particular young people, but again, I rely on the fact that we will be able to strike a balance."
Mr Healy-Rae said that he was hopeful changes to limits would allow towns such as Killarney to continue to thrive.
He said: "Killarney is the tourism capital of the western world, in my humble opinion, and there is 14,400 people in that town.
"An evidence-based approach will have to be brought forward to protect the tourist industry in towns like that and throughout the rest of the country."
An Air BnB spokesperson has welcomed the new rules, particularly the national registration scheme.
"We have long called for Ireland to introduce proportional short-term letting rules, including a host register, that protect the families, communities, and businesses that depend on tourism," they said.
"While Airbnb is not the cause of long-standing housing challenges, we will continue to work with the Government as it looks to bring in new regulation," it added.
