The book states that there was 'no proof that the Germans intended to exterminate' the Jews and that pictures of Nazi concentration camp victims were corpses exhumed after the 1945 Dresden bombing.
The grant of Ir pounds 1,000 ( pounds 1,095) has already been paid. Sean De Freine, secretary of Bord na Leabhair Gaelige - a quango which comes under the Department of the Arts and Gaeltacht and funds Gaelic books - denied that the book was anti-Semitic and said that any grant was a private contractual issue with the publisher, Padraig O Snodaigh.
Mr O Snodaigh said that though many of the author's views were 'ridiculous', he felt the memoir had been worth publishing. He has volunteered, however, to donate the grant money to any Jewish charity.
The subsidy has caused deep embarrassment to members of Ireland's ruling Fianna Fail-Labour coalition government, one of whom, Mervyn Taylor, the Minister for Equality and Law Reform, is Jewish. Mr Taylor expressed outrage over the book. It was 'reprehensible that a book of that nature should be aided from public funds', he said.
Ireland's President, Mary Robinson, a constitutional and civil rights lawyer, was said to be 'distressed and embarrassed' over the government grant, according to Dublin sources. The book's publication has also offended the Irish Jewish community.
The book Ce Hi Seo Amuigh? ('Who Is That Outside') was written in Irish by Roisin Ni Mheara, who was adopted into the family of General Sir Ian Hamilton in the 1920s. She later moved to Berlin where she joined William Joyce (Lord Haw Haw) on propaganda broadcasts and was twice married to SS officers during the war years.
Mrs Ni Mheara, now in her 70s, lives in Germany and Austria, although she maintains close links with Ireland and recently founded a museum on one of the Aran Islands. She has translated books by Irish authors into German and has several influential admirers.
One of them, Ciaran O Coigligh, a lecturer in Irish at St Patrick's College in Dublin, says on the book's dust-jacket that the 'people of Ireland are indebted to Roisin Ni Mheara for this most unusual book in Irish'.
The book, he wrote, 'will attract comment and will be a source for reassessment of the mind-set of the Irish people and Irish-speaking people, especially during the World War II era'. Mr O Coigligh was referring to the fact that some Irish republicans sympathised with Hitler's national socialist philosophy during the Second World War.
The payment of the grant was revealed by a senior official in the Department of the Arts and Gaeltacht (Irish speaking areas). The minister responsible for the department, Labour's Michael Higgins, has refused to comment.
Bill Shipsey, a prominent Irish lawyer and former executive board member of Amnesty International, said that the International Convention on Civil and Political Rights provided that 'any advocacy of racial hatred shall be prohibited by law'.
Ireland also has a duty under the 1960 International Convention on the Elimination of All Forms of Racial Discrimination to stop the publication of the book. 'It's clearly in breach of Ireland's obligations under the convention for the state to fund a publication which incites racial hatred.'