Ireland to apply for bailout package

Finance minister Brian Lenihan would not put a figure on the size of the loan but said it would run to "tens of billions" of euros.

Lenihan said he would ask Cabinet colleagues to back an application for a bailout from Europe and the International Monetary Fund (IMF).

In a statement the UK Treasury said it was backing the move and would be "closely involved in discussions on the scale and type of assistance as they develop." 

The Irish Cabinet has been holding an emergency meeting to finalise a four-year programme of steep spending cuts.

Prime Minister Brian Cowen and his colleagues were due to set out tough austerity measures aimed at saving 15 billion euros by 2014.

He told State broadcaster RTE: "I will be proposing to my colleagues that we should formally apply for a programme.

"I believe it's important that this state continues to fund itself in a stable way.

"We spend about 19 billion (euros) more as a state than we're bringing in, in tax and other receipts.

"So clearly if the state wasn't able to borrow these monies, we wouldn't be able to function."

Officials from Europe and the IMF have been in the country since Thursday, assessing its financial state.

If the government accepts a bailout package, it is likely to be greeted with hostility in Ireland.

There are mounting concerns the State would effectively be handing over control of its economy to the IMF and EU.

Ireland could come under pressure to over its rate of corporation tax, which currently stands at 12.5%.

Some of Europe's biggest economies, such as France and Germany, are not happy with the rate, claiming it is anti-competitive.

However, the Irish government has said it would resist pressure from the EU to increase the tax.