A rift over the future role of the Central Bank has deepened among members of the committee looking at the issue of a single regulator for the financial services sector, The Irish Times has learned.

The group met yesterday and decided to reverse the decision it made the day before to give the Central Bank a major role in the area of consumer financial regulation.

Some members of the committee are understood to have said that it would be impossible to publicly defend the original decision. The members of the committee opposed to the Central Bank having a role are now planning to issue a report recommending an entirely independent body.

The representatives of the Central Bank and the Department of Finance are understood to be against this action and are likely to include their reservations in the report.

Another meeting is due to take place next week when the final details of the report will be circulated. The report is expected to be completed at some stage next week and then presented to the Tanaiste, Ms Harney and the Minister for Finance, Mr McCreevy, who will bring it to Cabinet.

The representatives of the Central Bank and the Department of Finance are understood to be planning to lobby strenuously on the issue, according to sources.

But the Department of Enterprise, Trade and Employment is strongly in favour of a new "greenfield" operation with no ties to the Central Bank, apart from the transfer of some staff.