The Government has won its confidence motion in Minister for Foreign Affairs Simon Coveney by 92 votes to 59.
The Coalition won with the support of many TDs in the Independent Group and Regional Independent Group.
The vote came on the day TDs returned after the summer recess, eight weeks after the controversy first erupted.
Before the Dáil vote, Mr Coveney said that he regretted the "preventable controversy" over the appointment of Katherine Zappone as UN special envoy.
Mr Coveney told the Dáil that it was distracting from the business of Government.
He was speaking during a debate that followed a no-confidence motion tabled by Sinn Féin over the handling of Ms Zappone’s appointment.
"It seems scarcely credible that a short-lived appointment should dominate public discourse when the country faces such serious challenges," the Cork South Central TD said.
"I take my share of blame for this debate."
"I should have and could have dealt with this issue much more comprehensively in early August", he said, adding that he "didn't take the issue seriously enough then".
"I was too defensive", he said, but insisted the role was "conceived, designed and recommended to me following consultations with my department".
It was his decision, he said, and was "in no way corrupt or dishonest".
Simon Coveney says he regrets that the appointment has distracted from the work of Government. He says he should have dealt with this issue much more comprehensively in early August. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/yN02O6j10j— RTÉ News (@rtenews) September 15, 2021
The Sinn Féin leader accused the Government of defending "cronyism" during the debate.
Mary Lou McDonald said that Mr Coveney tried to "make up a job for a friend", and "when caught red-handed, he went about covering his tracks".
He twice "fed a cock and bull story to a committee of this Oireachtas. This is by any standard an abuse of office", she said, adding that her party had no choice but to present the motion.
Ms McDonald told Taoiseach Micheál Martin that "the cronyism that you so loudly defend" has "squandered the hope of generations".
These failures persist "because you govern for vested interests of those at the top," she said.
"This is all about power," she added.
Sinn Féin's Mary Lou McDonald says this evening's motion of no-confidence in Simon Coveney is also about the Government’s 'rotten way of doing business’. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/fZMIbJNe9W— RTÉ News (@rtenews) September 15, 2021
This evening, Mr Martin told the Dáil that while Mr Coveney's handling of the appointment was wrong, it would be disproportionate to remove him a minister on this basis.
He said accountability is important and the minister has twice provided explanations to an Oireachtas committee.
"People are really concerned about health services. They are really concerned about housing," he said.
The Taoiseach said "appointing your own" is the Sinn Féin approach when in government, adding it had made the city of Derry its own "fiefdom".
Mr Martin said that the Dáil was "being asked to accept" that a non-appointment "was a gross abuse of office", which he insisted is "manifestly not the case".
Mr Martin accused Ms McDonald of making comments of "breathtaking" cynicism.
He said Sinn Féin was not on steady ground on this issue and Mr Coveney has at all times acted in good faith.
Taoiseach Micheál Martin says Simon Coveney's handling of this appointment would be wrong, but it would be disproportionate to remove a minister on this basis. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/aPThPFmwHp— RTÉ News (@rtenews) September 15, 2021
Tánaiste Leo Varadkar told the Dáil that without Mr Coveney there would not be an Executive in Northern Ireland today.
He told the Dáil that Mr Coveney was committed to public service and has "always put the long-term interests of the Irish people first".
"We made mistakes" when it came to the proposed appointment of Ms Zappone, Mr Varadkar acknowledged.
"Without [Simon Coveney] Michelle O'Neill would not be the deputy first minister today", he said, provoking laughter from the opposition benches.
He accused Sinn Féin of trying to "hound an honourable man out of office" for political gain.
Fine Gael's Leo Varadkar says without Simon Coveney, there would not be an Executive in Northern Ireland today. He adds that Mr Coveney is leading Ireland’s efforts on the UN Security Council and Brexit. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/7GCbbos0fQ— RTÉ News (@rtenews) September 15, 2021
Many other TDs also paid tribute to Mr Coveney's hard work on Brexit.
"Many in my party tonight will reluctantly - reluctantly - vote confidence in Minister Simon Coveney," Fianna Fáil's Cathal Crowe said.
One of them was Barry Cowen, who said it was "an unseemly controversy" and a "failure of leadership and collective responsibility at the heart of Government".
"There isn't unanimous absolute or wholesome confidence in the minister within Fianna Fáil," he added, but ultimately all its TDs except Marc MacSharry supported the Government.
John McGuinness was absent, but had a pairing arrangement.
Labour's Brendan Howlin said the controversy had damaged confidence in politicians.
It was "crystal clear" the coalition would win the vote, he added, but urged the Government not to be gleeful later.
Brendan Howlin of Labour says Simon Coveney created a new position and offered it to Katherine Zappone. He says he thinks the special envoy role is a good idea, and would attract many excellent candidates, but that is not how it was handled. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/unIMc8MLuG— RTÉ News (@rtenews) September 15, 2021
Social Democrats TD Gary Gannon said his party will support the motion as a rejection of "a culture of arrogance at the highest levels of the State".
Gary Gannon of the Social Democrats says there is a 'culture of arrogance' at the highest levels of the State. He says they reject cronyist culture, and the fact that Ireland is now without an envoy for LGBTQI+ rights as a result. | Read more: https://t.co/XfO67u7l4q pic.twitter.com/3Qkf9pC2gz— RTÉ News (@rtenews) September 15, 2021
Earlier, Mr MacSharry resigned from the parliamentary party and voted against the Government in the confidence motion on Minister Coveney.
Meanwhile, in the Dáil and under privilege, Sinn Féin TD Matt Carthy accused Minister Simon Harris of leaking from Cabinet.
A spokesperson for Minister Harris said that the accusation amounts to "a clear misuse of Dáil privilege and it's untrue".