Social Protection Minister Heather Humphreys contacted the Taoiseach and Tanaiste in the hours before her Dail speech to insist people on welfare should be permitted to travel to 'green list' countries without having their payments stopped.
After facing a barrage of opposition criticism on Tuesday night, Ms Humphreys met with her officials yesterday morning and said a solution had to be found to end the controversy surrounding the Pandemic Unemployment Payment and Jobseeker's Allowance.
The minister insisted they had to undo measures which penalised those in receipt of the payments for travelling abroad.
However, she did not want a free-for-all and said people should still be deducted payments if they travel to countries which the Government deems to have a high infection level.
After making the decision with her officials, Micheal Martin and Leo Varadkar's offices were contacted to let them know the minister had decided to amend legislation around the payments and bring them in line with the Government's travel advice.
The Taoiseach and Tanaiste agreed with the move and it was decided Ms Humphreys would make the announcement in the Dail ahead of Leaders' Questions, where it was expected Mr Martin would be grilled on the controversy by Sinn Fen leader Mary Lou McDonald.
It was hoped an opposition TD would question Ms Humphreys on the travel ban for welfare recipients during a debate on social protection-related issues.
However, after hours of Dail debate on the topic the previous evening, TDs were focused on other issues related to State welfare. Ms Humphreys was then forced to seek time to speak from her Fine Gael colleague Jennifer Caroll MacNeill and sought permission to address the chamber from acting Dail chairman John Lahart.
The minister described the Pandemic Unemployment Payment as "a solidarity payment to protect people's income at a time of national crisis".
"I strongly believe that any person who breached that solidarity by claiming a payment they were not entitled to because they were no longer living in the country should have their payment stopped," she added.
However, she admitted her department could have "communicated more effectively on this issue" and pledged to review all cases where payments were stopped because someone went on holidays.
The minister then announced she was reversing her decision to strip people of the Pandemic Unemployment Payments and Jobseeker's Allowance.
"That will mean persons on Pandemic Unemployment Payment can travel to green list countries and their payment will not be impacted," she said.
"As with Jobseeker's, persons travelling to countries outside the green list can only do so for essential reasons."
The minister made the decision despite support from her Fine Gael colleagues who believed the Government should hold the line on stopping payments to foreign vacationers.
However, some senior party figures believed the ban on travel for people who lost their job due to the Covid-19 restriction was sending a bad message.
"These people on the pandemic payment were people who got up early in the morning before the lockdown and will hopefully get up early in the morning again," the source said.
Later in the Dail, Mr Martin clashed with Ms McDonald when she raised questions about checks by social welfare officers at airports.
He said the Department of Social Protection is "not out in any shape or form to undermine anybody on the Pandemic Unemployment Payment."
Ms McDonald claimed Mr Martin had broken the consensus and the "notion that we're all in this together" by sending inspectors to the airport.
She claimed he acted outside the law in doing this.
Mr Martin said the Sinn Fein leader had "a nerve" to criticise Ireland's green list of 15 countries when there was 59 on the North's.