The Minister for Finance has turned down a request from the Minister for Defence for extra staff in advance of Ireland's presidency of the EU, which begins in January.
The decision comes despite suggestions that the Government may host a major summit meeting in Dublin to coincide with the formal accession of 10 new member-states to the EU in May 2004.
Such a summit would require a major security presence. Recent EU summits have attracted angry protests involving thousands of anti-capitalist protesters and police.
In Gothenburg, hard-pressed riot units resorted to gunfire, wounding three people.
A host of smaller meetings will be held in Dublin involving ministers from member-states on a range of areas including finance, environment, transport and social affairs.
The Minister for Defence, Mr Smith, asked the Minister for Finance, Mr McCreevy, for a "small increase" in staff earlier this year to ensure the State had enough resources to meet the demands of the six-month presidency. However, sources have confirmed that this request has been rejected.
While an official decision was taken to relocate EU summit meetings to Brussels following violent protests, Greece decided to host a special summit in Athens last month to mark the first step in the accession of the EU's 10 new member-states.
A spokesman for the European Commission in Dublin said while it was likely a similar summit meeting would be held in Ireland in May, the overall size of the presidency was likely to be smaller than on previous occasions.
This is due to a recent agreement to reduce the number of ministerial meetings which make up the bulk of the presidency.
However, the Department of Foreign Affairs yesterday said no firm decision had been made on whether a summit would be held.
The Irish presidency promises to be an important one in which a new constitution for the EU may be ratified in Dublin.
The Minister of State for Europe, Mr Dick Roche, has said the Government will push to have the constitution known as the Treaty of Dublin if the constitution is finalised during Ireland's presidency.
Mr McCreevy's refusal to sanction extra posts for the Defence Forces comes at a time when he is trying to reduce the strength of the Defence Forces as part of a fresh round of Government cutbacks.
Mr McCreevy has asked all Government departments to identify posts which would remain unfilled as part of a drive to cut the numbers employed in the public service by 5,000.
However, Mr Smith has refused to authorise a reduction in the Defence Forces.