It is understood that the Government has agreed in principle to examine funding mechanisms to support a community hotel in Roscrea, Co Tipperary.
The proposal was put forward by Fianna Fáil TD Jackie Cahill at a meeting between local representatives and Minister for Integration Roderic O'Gorman.
Mr Cahill had described the meeting as "very positive".
Speaking on RTÉ's Prime Time, Minister for State at the Department of Tourism, Culture, Arts and Sport Thomas Byrne confirmed Government plans to establish a "community-owned" hotel in Roscrea.
"Clearly, there's a great need for the facilities that a hotel offers to the community," he said.
Up to 17 asylum seekers, understood to be women and children, were moved into Racket Hall hotel near Roscrea.
Scuffles between protesters and gardaí took place as the international protection applicants were being brought into the hotel yesterday.
The Garda Public Order Unit was present and up to 200 people were protesting at one point. One man was arrested under the Public Order Act and later released.
Racket Hall has been selected to house 160 international protection applicants.
People taking part in the protest, now in its sixth day, say they have been horrified at the scenes that emerged yesterday on TV and social media and say they were portrayed as being racist and aggressive.
Taoiseach Leo Varadkar said he was asking ministers to look at how they can help support the ten districts in the country that have the highest proportion of Ukrainian refugees and international protection applicants.
Speaking on his way into Cabinet this morning, Mr Varadkar said: "We've done that already to a certain extent with the Community Recognition Fund, but I think we need to do more and to help out with increased resources around health and around education."
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The Taoiseach said he understands the frustrations people feel in Roscrea.
"I understand that hundreds of people have been accommodated in Roscrea in the last couple of years, both from Ukraine and people seeking international protection, and that has put the town under pressure.
"And I can understand the frustrations that everyday people feel and some of the public reps feel there as well," he said.
Mr Cahill said it was important that the town had the resources it needed. However, he believes local representatives are pushing an "open door" as there is Government support to boost resources.
There is also the issue of having a functioning hotel in town, he said.
It is understood the meeting heard a proposal calling on the State to buy a vacant hotel in the town centre.
As many as 40 to 50 protestors remained outside the hotel today in opposition to asylum seekers being moved in to it.
Protestors plan to continue indefinitely and say that those housed at the hotel should be moved to another town.
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Sinn Féin TD Matt Carthy urged people not to protest outside properties where asylum seekers are being accommodated.
He said what happened in Roscrea was completely unacceptable and people should not direct their frustrations at women and children who have come to Ireland seeking shelter and protection.
However, he defended his party colleague, Tipperary TD Martin Browne, who spoke at a public meeting in Roscrea on Sunday.
"I think if anybody listened to what he said at that meeting they would find very little to disagree with," he added.
This comes as many townspeople told RTÉ's News at One their major concern is over the hotel's change of use.
They told the programme they are angry and concerned that community functions, funeral receptions and weddings, which were once facilitated at the hotel, have no venue to take place in.
"Minister Heather Humphreys announced grants for vacant buildings in rural towns yesterday," Mr Cahill told RTÉ News.
"The old Grants Hotel in Roscrea should be included for a similar allocation."
Under the scheme announced by Minister for Rural and Community Affairs Heather Humphreys yesterday, former garda stations, post office and schools are to be converted for community use.
One of those, Caroline Phelan from Roscrea, said she was heartbroken as a mother and grandmother to see the young children being brought under garda escort and exposed to the scenes.
She accused the gardaí of taking a heavy-handed approach with the presence of the 'soft cap' public order unit.
Ms Phelan said gardaí made no effort to negotiate with local people in advance of the bus of asylum seekers arriving.
A garda statement said an operation was put in place yesterday and shortly before midday.
It was carried out by uniformed officers and supported by 'soft cap' public order personnel, who are officers not wearing helmets or body armour, who provided a cordon at the entrance to the hotel.
A number of the women who are part of the protest brought bags of toys up to the hotel for the children inside.
They say they are not against women and children being housed there and want to help them, but they oppose the way the issue was handled and the way they have lost their local hotel.
They say they are maintaining their peaceful protest.
Mr Varadkar said people are entitled to protest and to hold views that others find objectionable, but added that to engage in violence or to prevent people getting to their place of work or their home is anti-democratic and anti-freedom.
Speaking on RTÉ's Morning Ireland, Minister O'Gorman said families and female applicants will be housed in Racket Hall.
"I think the most effective thing I can do is meet with the TDs, meet with the local representatives, hear what are the resourcing challenges that the town is facing at the moment and see what I and Government colleagues can do to respond in a meaningful way," he said.
Mr O'Gorman said that he respects people's right to protest but believes that this can be done in a way that does not impact on vulnerable people.
"My understanding is that people are now settling into the hotel but that some children were upset by the tension they witnessed last night," he said.
The minister said he believes that many people are seeking to stir up anti-immigrant sentiment, and he doesn't think it is "ever acceptable to block vulnerable people from being able to access their accommodation".
Additional reporting by Cathy Halloran, Mícheál Lehane, Cian McCormack
