The Cabinet has agreed a proposal that Ireland makes a financial contribution of €1.5m, rather than taking in a group of 350 people seeking international protection as part of a European solidarity agreement.
It is understood the approach, jointly proposed by Minister for Justice Helen McEntee and Minister for Integration Roderic O'Gorman, is to take account of what is termed the "unforeseen increase" in people already coming from Ukraine, as well as international protection applicants.
The Voluntary Solidarity Mechanism was created to assist member states along the EU's external borders who are under pressure from new arrivals, including countries along the Mediterranean receiving people from search and rescue operations.
Under the deal, Ireland agreed to accept 350 people seeking refugee status.
Tánaiste Micheál Martin said that the payment is not a fine, adding that it is a part of voluntary agreement.
Mr Martin said that in the intervening period, huge numbers had come in to the country running at "five times" what Ireland would usually see.
He added that Ireland had to take care of Ukrainians and international protection applicants first before facilitating relocations.
The Cabinet was asked to back making a financial contribution "for now" due to the difficulty in finding accommodation.
'Embarrassing and shameful'
Meanwhile, Labour Party Leader Ivana Bacik said she was "very concerned that the Government is going to be, essentially, paying its way out of the obligation to take in asylum seekers."
She said Ireland is the European Union country with the largest budget surplus and is "apparently" saying to the EU that it does not have capacity to take in a "relatively" small number of asylum seekers.
Ms Bacik said it was "embarrassing and shameful" that Ireland was not able, it seems, to provide such accommodation, and that in her own constituency people seeking international protection are still sleeping in tents.
She said the Minister for Integration, Roderic O'Gorman, and officials in his department are doing their "very best", but it appears there is no "central leadership" from the Taoiseach on the subject.
Fianna Fail senator Lisa Chambers, a member of the Oireachtas Committee on EU Affairs, said the Labour Party's position "fails to recognise the extraordinary scale of what we're dealing with in the last year".
Senator Chambers said "most reasonable people would step back" and say more than 100,000 Ukrainian refugees and international protection applicants coming "is a big challenge for any country to deal with."
Earlier, the Minister for Finance said Ireland will fulfil, in full, its international obligations, but the country is under pressure in relation to accommodation.
Speaking on RTÉ's Morning Ireland, Michael McGrath said what has been achieved so far is remarkable with more than 85,000 people (65,000 Ukrainians and 25,000 International Protection Applicants) being accommodated by the State.
"We have been very honest and open with people about the pressure that is there in terms of accommodation provision around the country," he said.
Change to Covid-19 jab agreement
Separately, Minister for Health Stephen Donnelly updated the Cabinet on a change to the EU's purchase agreement with BioNTech Pfizer regarding Covid-19 vaccines.
The deal means that Ireland and other member states can take delivery of the vaccine when needed over the next four years, rather than in 2023.
The amendment, which was negotiated by the European Commission, also means Ireland will continue to have access to vaccines adapted to new variants as soon as authorised by regulators.
Brussels believes the amended contract takes into account the improved epidemiological situation, while also continuing to ensure access to the latest available version of vaccines should variants of concern appear in the future.
Mr Donnelly also updated Cabinet on spending in his department and an overrun in the first quarter of 2023. The deficit is down to what is described as by "significantly higher demand for services".
These include emergency department admissions, inpatient and day cases, as well as inflation and pay pressures.
It is understood that action has been taken to slow management and admin recruitment for the remainder of the year.
Ireland will be involved in closer EU cooperation on cross-border exchanges of data, after Cabinet approved a plan brought by Minister McEntee.
The aim is to facilitate electronic communication between member states in cross-border judicial proceedings.
It is understood the exchange of documents will include both criminal and civil cases, part of what is called the e-CODEX system.
It also involves a proposed EU Directive on digitalisation of judicial cooperation, which would ensure that documents are not refused or denied legal effect solely on the grounds of their electronic form.
The proposed directive would ensure the validity and acceptance of electronic signatures and seals in the context of electronic communication in cross border judicial cooperation and access to justice.
Cabinet was asked to approve Minister McEntee's proposal that she notify President of the EU Council Charles Michel that Ireland wishes to proceed.
Relevant motions will now be brought to the Oireachtas.