The Government of Uganda has returned €4 million of misappropriated aid funds to the Irish Government.
Tánaiste and Minister for Foreign Affairs Eamon Gilmore said the restitution followed "intensive high level discussions with the Government of Uganda over the last two months".
He welcomed the return of the money, saying it would contribute towards Uganda's efforts to tackle corruption.
The €4 million which has been returned will fund programmes in Uganda to continue Ireland's support to the country's poor. The Tánaiste has instructed officials to examine options for a possible programme of support during 2013, but no decisions have been made yet. Any such programme will involve direct oversight by Ireland.
"I have now instructed my officials to examine options for a possible programme of support for the people of Uganda during 2013," Mr Gilmore said.
"This will take into account the ongoing assessment of all management systems across our partner programmes, to ensure that risks are being appropriately identified and managed.
"Looking to the future, we stand ready to continue to work with the auditor general of Uganda in his efforts to root out corruption, strengthen financial controls, and build robust and transparent systems of accountability."
The funds were intended for the Peace, Recovery and Development Programme to assist the war-torn northern part of the country, and the fraud was discovered by the auditor-general of Uganda. A team from the evaluation and audit unit of the Department of Foreign Affairs went to Kampala to examine how the funds were diverted without authorisation by officials in the office of prime minister Patrick Amama Mbabazi.
A Spokeswoman from the Department of Foreign Affairs said "Ireland will not return to funding through government systems in Uganda until we are fully confident that the government has strengthened its internal financial controls and acted against officials who were implicated in this fraud."
Fine Gael TD and chairman of the Oireachtas Committee on Foreign Affairs Pat Breen said those who are supposed to benefit from Irish Aid funds should "not suffer as a result of this corruption".
It was "more important than ever" that all Irish Aid monies be closely monitored, he said. It was essential that such misappropriation was not allowed to happen again, he added.