Ministers are preparing to slash the social welfare budget by almost €1bn as part of a comprehensive spending review.
While the Department of Social Protection has predicted potential savings of €500m in a crackdown on fraud, it is understood that cuts of a similar amount are being considered for next year.
The spending review -- which is set to be published before December's Budget -- is also believed to include major cuts to payments made to teachers for their supervision duties.
Department of Education officials are looking at making potential savings of €200m by slashing the allowances -- which are paid on top of teachers' salaries.
Cuts to the school transport system are understood to have been discussed by department officials, however the focus has now moved on to supervision payments.
Another area under the spotlight is the current rent supplement scheme.
The State's spending watchdog, the Comptroller and Auditor General, has questioned the value of the scheme, claiming that it provides little incentive to landlords to lower their charges.
Close to 95,000 homes are supported by the supplement scheme, which means the Department of Social Protection funds about 50pc of the State's private rented accommodation.
Government sources do not believe the Cabinet will row back on its commitment to spare welfare rates from the knife, but major cuts are expected given the strict conditions of our EU/IMF bailout plan.
"It's going to a harsh Budget but it's fair to say that not everything is on the table, the Government has made commitments and they will be expected to keep them," one senior TD told the Herald.
Minister for Public Expenditure Brendan Howlin will hold serious meetings with all of his Cabinet colleagues over the next few weeks in which he is expected to demand serious cutbacks in all departments.
Sources are concerned that the meetings will heighten tensions between the two Government parties, with Health Minister James Reilly already indicating that he has had disagreements with the Labour Party minister.
Minister Reilly suggested following the meeting that there were different views over whether to impose cuts on consultants' salaries. The move is expected to be strongly resisted by hospital consultants.