The Government acted swiftly yesterday to head off a row over stopped payments to county enterprise boards. All of the chief executives of the boards initially received a letter from the Department of Enterprise, Trade and Employment saying that because of an administrative error no grants could be paid until April.

But after this became public, the department issued a statement saying that situation had changed, and there was money available again.

In its letter to county enterprise chief executives, the Department said it had been told by the Department of Finance that its interpretation of an act passed by the Oireachtas was "incorrect".

This meant that a £100 million (€126 million)ceiling had been reached, and no further grants could be allowed under the law until a new Finance Bill is passed in April, the letter said.

"That is no longer the case - the matter has been resolved, and payments are to be made in usual way," the spokeswoman said last night.

Earlier, the Labour Party's spokesman on Enterprise, Trade and Employment, Mr Pat Rabbitte, had described the matter as "a serious miscalculation". He warned that jobs could be lost and called on the Tanaiste, Ms Harney, to act swiftly.

"It is a lamentably inadequate response to say that `the earliest date that the necessary legislation can be provided is 3rd April, 1999 as part of the Finance Act'," Mr Rabbitte said. "This really is an unpardonable cock-up."

The chief executive of the largest of the agencies concerned, the Dublin City Enterprise Board, said he would like to see matters resolved as quickly as possible.

"It has left us, in the short-term, with no money. We would have contracts of £300,000 to £400,000 (€380,000 to €508,000) between now and April. We're trying to resolve it through the local authority, but it's not a nice position to be in," said Mr Gerry Macken.

The lack of resources would mean stalling on grants, business mentoring, and training, Mr Macken added, and this was unfair to the small companies who had already gone through the rigorous grant process.

"It puts them in a very tight situation financially - if they had the resources, they wouldn't be coming to us," he said.

"Even if I got a letter of comfort from the Minister saying that this was an administrative hiccup and that it would be resolved - then I would could at least bring that to the banks," Mr Macken said.

The spokeswoman for the Tanaiste said Enterprise Board chief executives would be informed in writing that the original letter could now be disregarded.