Minister for Transport Eamon Ryan has written to the families of the crew of R116 to let them know that the department will cover their "reasonable legal expenses" incurred as a result of the review into the accident.
There has been criticism that families had been denied cover for their legal costs.
In a statement, Mr Ryan said the Chairman of the review board wrote to him with a recommendation that the reasonable legal costs of the families be covered.
Mr Ryan said the Department of Transport argued before the review board that it did not have authority to make an order on costs; this was done because of the broader implications that such a ruling might have in future.
He said this was never intended to imply a reluctance to pay these costs, and the additional stress this may have caused is regretted
RTÉ Investigates reported this week that the families of the pilot, co-pilot and winchman who died while on the search and rescue mission in 2017 are facing significant legal bills arising out of the department review of the accident.
Pilot Dara Fitzpatrick, co-pilot Mark Duffy and winchman Ciarán Smith along with winch operator Paul Ormsby lost their lives when R116 crashed into Blackrock Island off the coast of Mayo.
Speaking during Leaders' Questions in the Dáil earlier, Mr Ryan denied that officials for the Department strenuously fought against costs being awarded to families.
He said he had engaged with the Department of Public Expenditure and Reform to ensure such a situation does not happen again and that it does not add to hurt for families.
The issue was raised by Sinn Féin TD Pearse Doherty who highlighted RTÉ's reporting of the development.
Mr Doherty said it was absolutely scandalous that officials had fought against families to ensure they would not get costs.
He said it was a most callous approach and a horrendous way to treat families of four people who died in the line of duty trying to save others.
The father of Dara Fitzpatrick has welcomed today's announcement.
"It's a great relief that this has happened," John Fitzpatrick told RTÉ Investigates.
"I am delighted and I am sure all the other families are delighted."
