The Minister of State for Disabilities in the Department of Children has said that she was alarmed and outraged to learn about the practices revealed in last week's RTE Investigates programme.
It highlighted how the Department of Health had been secretly using information from private doctor consultations to build and maintain dossiers on children with autism who were involved in legal actions against the State.
During statements in the Dáil, Fianna Fáil TD Anne Rabbitte said that while happened may have been lawful, it was not right and it needed to end.
She said the system lacked transparency and it appeared suspect - even if it was not.
Ms Rabbitte said the Department insisted it was normal practice for defendants in litigation to share appropriate information with each other where they have a common interest.
But she added that the Department of Health was clear that it does not seek clinical reports on plaintiffs from clinicians. However what she called "service updates" were required to inform potential settlements of cases.
She said it had always been understood by the Department that it had a clear legal basis for obtaining, sharing and retaining this information and legal advice supported that view.
Sinn Féin's Pearse Doherty said the practice was unethical and asked when families affected would be told of their involvement.
Tánaiste Leo Varadkar said that work was underway but he did not have a timescale.
Sinn Féin health spokesperson David Cullinane said that the engagement between the State and children with special needs was too adversarial.
He said that it was unacceptable because the State refuses to provide what children need.
Mr Cullinane called for the adversarial approach to stop and said there were moral, ethical and trust issues as well as issues on doctor patient confidentiality.
Labour education spokesperson Aodhan Ó Riordáin said the RTÉ report exposed the contempt the State has for families who are dealing with diagnoses that are difficult and challenging.
Fine Gael TD Michael Creed said he was disappointed with the Government's response so far in not coming out and saying the practice was wrong and that it would stop.