The Pandemic Unemployment Payment (PUP) will be extended to new entrants until March under plans to be discussed by the Cabinet today.
The welfare payment for people who lost their jobs due to the outbreak of Covid-19 was due to be closed for new applicants on January 1.
However, there are concerns some employees are reluctant to return to work because they are worried they will only get the Jobseeker's Allowance if they lose their jobs again in the new year.
More than €4.3bn has been spent on PUP to date and there are currently 352,078 people in receipt of the payment.
Social Protection Minister Heather Humphreys will bring the memo to the Cabinet on extending the scheme to new entrants until March.
There are currently four rates of PUP ranging from €203 to €350 depending on how much an employee was earning before they lost their job.
If the scheme was closed to new entrants in January, workers would only be entitled to the €203 jobseeker payment if they became unemployed due to Covid.
The Government is drafting plans for reopening the country after the second national lockdown under Level 5 restrictions.
It is expected the country will be put into different stages of Level 3 restrictions for the month of December.
Retail, gyms and hairdressers are expected to reopen on December 1, but restaurants may have to wait another week under plans being discussed by government.
Government officials were examining plans to ditch the €9 substantial meal rule for pubs that serve food in favour of new regulations.
However, sources involved in the talks said it is now expected the €9 meal rule will remain in place because officials cannot decide on another mechanism to distinguish between pubs that serve food and those that do not.
It is still seen as unlikely that wet pubs will reopen before Christmas because there is concern that would lead to a significant spike in new coronavirus cases.
Rules on household visits and inter-county travel will be eased close to December 25 to allow family gatherings for Christmas.
The Government will put a significant emphasis on people taking personal responsibility during this period but they will be issuing guidance.
Chief executive of the Licensed Vintners Association, Donall O'Keeffe, has pointed out that the Berlin D2 bar which was at the centre of controversy after it appeared to flout Covid-19 rules could trade again next month because food is served there.
He said "iconic pubs" like Grogan's and O'Dohoghue's would have to stay shuttered in the run- up to Christmas under the proposals.
Mr O'Keeffe said media reports indicate the Government is "gearing up to punish" pubs that have been closed for eight months.
"How is it fair that the Government seems intent on allowing the likes of Berlin D2 to trade, while keeping venues that have been impeccable during this crisis like Grogan's closed?" he asked.
Berlin D2 staff came under fire when footage appeared on social media of a masked worker standing on top of a bar while pouring shots into customers' mouths.
Owner Jay Bourke described the footage as "20 seconds of madness" and said that it did not reflect what went on that day.
The bar on Dame Lane in Dublin now faces a court challenge by gardaí to the renewal of its licence.
The case is adjourned until January because district court hearings have been curtailed because of Level 5 restrictions.
Separately, a Health Information and Quality Authority report showed no evidence that wet pubs pose a greater risk than restaurants, according to the vintners' group.
Spokesperson Jimmy Healy said the 250 wet pubs in Dublin have not been open for a single day since March 15.
Wet pubs outside the capital had a brief two-week reopening at the end of September and early October before having to close again.
The organisation said the guidelines for restaurants, food pubs and wet pubs recognises them all as "controlled environments", with the same social distancing requirements.
Another publicans' group, the Vintners Federation of Ireland, said pubs should be given the same opportunity as other businesses to allow staff to return to work next month.
In a statement, it said that government data proves private dwellings and not hospitality outlets are the primary source of Covid outbreaks.
The group claimed the deputy chief medical officer, Dr Ronan Glynn has said that all pubs would be given the option to reopen at the same time once lockdown ended.
"We also know there is pent-up demand after a very difficult year," said chief executive Padraig Cribben.
"Permitting all pubs to open will distribute demand across as many safe and controlled venues as possible."