The Taoiseach has said that €2.2 m of the €5m allocated to the Strategic Communications Unit this year will be spent before the unit winds down in July.
Some €1.33m has already been spent and a remaining €900,000 was awarded in advertising contracts for Project 2040.
However, Mr Varadkar said these advertisements would not now focus on Project 2040 but most likely on the Healthy Ireland initiative instead.
He said the SCU did not cross the line into politics, but admitted that it should in hindsight have had a final sign-off on advertising content in newspapers.
Mr Varadkar is before the Oireachtas Finance Committee where he is outlining the work of his department and the proposed 2018 estimates.
The cost of running the Department of the Taoiseach will reduce by 9% this year.
Mr Varadkar said the estimates for his department are €35.9m, which includes "€24.9m for administration costs".
The Taoiseach said that "following the recent review of the work of the Strategic Communications Unit, I am reducing the funding allocation by €2.5m to €2.5m, €2.2m of which is already spent.
"I am therefore requesting that the committee approve an estimate for my department of €33.4m, which is a 9% per cent reduction on my department's revised estimate of 2017."
On the issue of the Strategic Communications Unit, Fianna Fails finance spokesperson Michael McGrath asked the Taoiseach: "What do you think are the lessons you have learned from the SCU?"
The Taoiseach said: "One particular lesson that might be learned is that in politics and when it comes to reform of departments, any time you try to do anything new or different there is inevitably going to be controversy".
Additional Reporting Conor McMorrow