The European Central Bank has agreed to ease the debt burden facing the Irish state over the colllapse of failed Anglo Irish Bank at the height of the financial crisis.
The move was announced after Finance Minister Michael Noonan secured an emergency vote in the country's parliament, the Dail, overnight to liquidate the bank.
The vote means the assets of the former Anglo Irish Bank, now known as the Irish Bank Resolution Corporation (IBRC), will be bought out by Ireland (OTC BB: IRLD - news) 's state run "bad bank", the National Asset Management Agency (NAMA).
Mr Noonan said: "As soon as the information relating to the proposal to liquidate IBRC was made public, there was an immediate risk to the bank.
"Given this position, I as minister for finance, took immediate action to secure the stability of the bank and the value of its assets, valued at 12 billion euros (£10.4bn), on behalf of the state."
Ireland had been seeking ECB permission to lessen the burden from a 31 billion euro (£26.8bn) high-interest IOU that was pumped into Anglo Irish to rescue it after the country's property bubble burst.
The government, which was forced to seek an 85 billion euro bailout from the EU and IMF in 2010, wanted to scrap the IOU and replace it with a long-term bond to stretch out the repayments.
That has now been converted into bonds that won't require repayment for an average 34 years - saving the country billions of euros - though all debts and liabilities will continue to be honoured.
Anglo Irish was at the forefront of the property boom in the Irish Republic under its former boss Sean Fitzpatrick, who is due to go on trial next month along with two other senior executives accused of alleged financial irregularities.
In 2010, the bank posted a 17.65 billion euro loss, the largest by any firm in Irish history.
In a statement the Central Bank of Ireland moved to reassure remaining IBRC deposit holders they will be paid under the liquidation programme.
"The Central Bank will arrange the repayment of duly verified and eligible deposits, up to a limit of 100,000 euros per person, to eligible depositors at IBRC," it said.
The statement continued: "Depositors do not need to take any action; the Central Bank will make payments directly by cheque where applicable."
Money is expected to be paid out over the coming weeks.
In the wake of the parliamentary vote, Irish Prime Minister Enda Kenny also moved to reassure people, saying the liquidation of Anglo Irish was a significant milestone in Ireland's "path back to prosperity and full employment".
"It closes a sad and tragic chapter in our economic and political history," he said.
But he added: "Let there be no doubt that this decision is not a silver bullet to end all our economic problems. The damage done by these economic institutions will take many years to rectify."