The Opposition parties have accused the Minister for Justice of making a humiliating U-turn on the issue of casinos, following his decision to regulate the gaming industry rather than close it down.
However, Fine Gael and Labour have made it clear they support the policy of legalising casinos in Ireland.
Michael McDowell's change of mind came after furious lobbying of the Government and Opposition parties by the casino industry.
Financier Dermot Desmond, who has invested in a €5.5 million casino off Grafton Street, Dublin, was among those who lobbied strongly against Mr McDowell's original plans.
The Minister said earlier this year that he intended to close off a legal loophole that allowed casinos to operate under the guise of private clubs.
However yesterday he said he had decided to bring proposals to Government for the establishment of a working group to consider legislation for the regulation of casino-style operations rather than their closure.
"I have made no secret of my concerns about the ease with which unregulated casino operations can be used by criminal elements for money-laundering. This is not just my view, it is internationally recognised as a risk factor in tackling issues around the proceeds of crime."
While the present law did not permit casinos, he added, there were acknowledged legal and practical difficulties operating it.
"Having considered a number of approaches to these difficulties, and in the light of the current international situation regarding such operations and the increasing use of the internet in this area, the Government has now decided that the best course is to set about examining ways of ensuring that this industry is tightly regulated," the Minister said.
Fine Gael spokesman on justice Jim O'Keeffe said that as recently as last Sunday, Mr McDowell had said he would bring forward legislation to close clubs which were operating as private members casinos.
"He had previously claimed, without producing any evidence whatever, that the clubs offered scope for money-laundering and the proceeds of crime.
"The real reason was the Minister's personal view that casino clubs are socially undesirable, despite the fact they operate with thousands of law-abiding members and never come to public notice," Mr O'Keeffe said.
"I don't see any real difference between casino club activity and betting on the dogs at Shelbourne Park, horses at the racetrack or in a bookie's office.
"Fine Gael favours an approach which accepts that adults have rights, but also personal responsibilities for their own actions, gambling and otherwise."
Mr O'Keeffe added: "This is another of Michael McDowell's big ideas to bite the dust, and not before time."
Labour TD Ruairí Quinn dubbed Mr McDowell "the Minister for flip-flops" and said he should stop gambling on high-profile statements and start running his brief properly.
"After his flip-flop on cafe bars only a few months ago, when the Fianna Fáil backbenchers sandwiched him quite effectively, his public pronouncements on casinos have now been shown to be nothing but a throw of the dice. He showed his hand before knowing what others at the Cabinet table held. This is yet another example of how this Government is falling apart at the seams.
"Casinos should be strongly regulated, but there is no logic in banning them altogether," Mr Quinn said. "It appears that McDowell wants to create a nanny-state, he doesn't want us to enjoy ourselves any more."
