The Taoiseach has told the Dáil that the Government's preferred Brexit deal will be "very hard to achieve."
Leo Varadkar was responding to questions from the Fianna Fáil leader Micheal Martin, who asked whether the Government had "over-hyped or over-sold" an agreement done in December by suggesting it had a "bulletproof" deal to avoid a hard border.
Mr Martin said [EU negotiator] "Michel Barnier and Commissioner Phil Hogan have put it very starkly, in saying that if Britain stays out of the customs union and out of the single market then there will be a border".
"Now that is in sharp contrast to what we were led to believe before Christmas," he said.
"Whether it was overhyped or oversold before Christmas, there was a clear sense, that it was legally fireproof," Mr Martin added.
In response the Taoiseach said there were three options outlined in December on how to avoid a hard border.
He said the Government's preferred option is to avoid a hard border through a new relationship with the EU and the UK, "in which we continue to have a new arrangement which is as close as possible to the customs union and single market which exists now.
"I think that will be very hard to achieve, but it's our preferred outcome and one that we are working on," Mr Varadkar said.
Minister for Business, Enterprise and Innovation, Heather Humphreys, said that the results of an economic study on the impacts of Brexit will influence the Government's negotiating position.
The analysis carried out by Copenhagen Economics, which was published today, predicts a reduction of up to 7% in Ireland's economic growth by 2030 as a result of Brexit.
However, Ms Humphreys said this was a worst case scenario that assumes the Government takes no action whatsoever on Brexit.
Speaking on RTÉ's News at One, she said that the Government is working with small businesses to help them prepare for Brexit.
The report was discussed by the Cabinet this morning and its findings will be presented at a conference in Croke Park on Wednesday week.
The study also forecasts an impact on workers' wages, which it finds could be between 2.6% to 8.7% lower in 2030 than they would have been without Brexit.
It found the sectors of the economy most likely to be most impacted by Brexit are: agri-foods, retail, air transport and pharmaceutical exporters.
Cabinet discusses affordable medicine plan
The Cabinet was also due to discuss a plan to form an alliance with four other countries in an effort to secure affordable medicines for patients who need expensive drug treatments.
Minister for Health Simon Harris will seek the approval of the Government to open talks with Belgium, the Netherlands, Luxembourg and Austria on drug pricing and supply.
Finding a way to make innovative new medicines, which are often expensive, available in Ireland is a challenge that has posed problems for several recent governments.
The Department of Health has been trying to come up with a solution for the last two years.
Mr Harris will request that a letter is sent to his counterparts in the four countries to formally begin talks to become part of the BeNeLuxA Initiative on drug pricing and supply.
The Department of Health believes this collaboration would allow Ireland purchase new drugs more quickly and at a lower cost.
Separately, Fianna Fáil has called on the Government to provide an additional €163 million every year for regional and local roads.
The party is tabling a motion tonight in the Dáil on the issue.
Transport spokesperson Robert Troy said a recent audit shows that 70% of regional roads have serious structural problems, while local primary roads across 12 council areas were described as "structurally distressed."
Mr Troy wants Minister for Transport Shane Ross to provide quarterly reports to the Dáil on efforts to address these problems.
Also speaking on RTÉ's News at One, Mr Troy accused the Government of under-investing in the road network.
Additional reporting by Justin McCarthy