The Louth TD, Mr Michael Bell, is to absent himself from the Committee of Public Accounts when the issue of Defence Forces compensation claims against the State is being discussed.
The Labour Party leader, Mr Ruairi Quinn, yesterday moved Mr Bell from his front-bench defence portfolio to assume responsibility for the marine and natural resources. Mr Jack Wall, TD for Kildare South, will take over as defence spokesman.
The decision to transfer Mr Bell from defence followed revelations that he was seeking damages from the Department of Defence for deafness allegedly caused by inadequate ear protection during his time with the FCA.
Mr Bell was unavailable for comment yesterday but sources claimed he had "no great difficulty" in accepting Mr Quinn's view that his position as defence spokesman would create a perception that he would be "partisan" on the specific issue of the Defence Forces damages claims.
However, the two men had an uneasy exchange on Wednesday night that ended inconclusively. They met again yesterday and Mr Quinn told the 61-year-old TD of his decision.
"He agreed to accept another portfolio," a Labour source said.
The leadership was embarrassed by Mr Bell's decision to take an action against the State while acting as the party's defence spokesman.
In his new role as defence spokesman, Mr Wall said the percentage of applications for damages would indicate that the system "is not being abused".
His Kildare South constituency has traditionally been associated with the Defence Forces. Its high proportion of families linked to the Army was behind Mr Quinn's decision to choose him as a replacement for Mr Bell.
The Curragh Command is situated in the heart of the constituency and the Artillery Barracks is in Kildare town. The Army Apprenticeship School is in Naas.
"A high percentage of the electorate are part of the Defence Forces and I will do everything in my power to ensure their needs are met," Mr Wall said.
Asked if he thought there was an undue rash of applications for damages, he said that "where medical opinion substantiates an application, they have a right to claim and let the courts decide". That is "their constitutional right".