The Government is to appoint a retired judge to investigate the controversy into the alleged bugging of the Garda Síochána Ombudsman Commission.
Sources also claimed one factor in the Government decision to initiate an independent investigaton was because of new information received by Minister for Justice Alan Shatter.
Mr Shatter will be making a statement in the Dáil tonight.
It is claimed the information “increased rather reduced clarity on the issue” and “creates doubt” around the report carried by a UK company into the alleged bugging of the GSOC.
The Cabinet this morning decided to ask a retired High Court judge to inquire into the affair.
“The story keeps changing, someone needs to get to the bottom of it,” a source said.
However, while it is understood a specific retired judge was mentioned, he or she has yet to to be approached, so sources were unwilling to give an identity. The judge is to report back within eight weeks on his or her findings. It will be an informal inquiry, and not be a commission of investigation
Government sources said the appointment of the judge is aimed at bringing clarity to the affair, but the terms of reference of the investigation have yet to be finalised.
The terms of reference for the investigation are to be published tomorrow.
The Cabinet also decided to refer the existing GSOC legislation to the Oireachtas Justice and Defence Committee, which will assess whether it needs to be strengthened.
Fianna Fáil justice spokesman Niall Collins said he is waiting to see the terms of reference of the inquiry. He has published a bill calling for the GSOC's powers to be increased, and said his propsals are likely to feed into the Oireachtas Justice Committee hearings.
Taoiseach Enda Kenny said the independent inquiry into the affair will look at “all matters of relevance”.
Mr Shatter, who will still appear before the Oireachtas Oversight Committee on the controversy, said he "briefed the Cabinet in relation to further information from GSOC and further information I have received regarding the alleged surveillance of GSOC".
“In light of the above, it was agreed at Cabinet today to appoint a retired High Court Judge to enquire into all matters of relevance,” Mr Shatter said.
“Over two weeks ago, before this controversy developed, I announced that I would be bringing to Cabinet a number of amendments to the Garda Síochána Act 2005 relating to GSOC.
“It was agreed at Cabinet today that the Joint Oireachtas Committee on Justice, Defence and Equality would be asked to hold such hearings as it deems appropriate and necessary and to make any recommendations as to amendments it proposes be made to the 2005 Act. I look forward to receiving their recommendations.
"I will be appearing tomorrow before the Joint Oireachtas Petitions Committee and will answer any questions that arise in relation to GSOC following on from the meeting it held Wednesday last."
Garda Commissioner Martin Callinan said he welcomed the new inquiry. adding: "An Garda Síochána will co-operate fully with the judge's examination."
The GSOC also released a statment, which said: “In light of the Government’s very recent announcement of its intention to appoint a retired High Court Judge to inquire into recent events involving GSOC, the Commission wishes to make no further comment at this time.”