Mr Varadkar said Minister for Social Protection Heather Humphreys is now carrying out a review of the carer's grant.

Sinn Féin accused the Government of disrespecting workers by not giving them the option of retiring and claiming the state pension at the age of 65

The Irish Fiscal Advisory Council has advised shifting to a system like Canada's to avoid the need for larger PRSI contributions in the future

Social welfare is set to be linked to people's past earnings, under plans set to be brought to Cabinet on Tuesday

Other changes include an increase in the annual limit for non-cash rewards to employees from €500 to €1,000 without the payment of income tax, PRSI and Universal Social Charge.

The State pension age will remain at 66, but those who work until they are 70 will get pension payments of up to 24 per cent more upon retirement

The tax dispute centred over a €45,833 compensation payment the worker received from his employer when he lost the use of a company car.

"Increasing inheritance tax, for example, increasing taxes on people's savings. There's no way that's going to happen while Fine Gael is in Government.

The Taoiseach has confirmed the broad outline of a deal has been already been finalised by coalition leaders.

The new measures will be announced on Friday by Minister for Social Protection Heather Humphreys.