Irish Finance Minister Michael Noonan has denied reneging on election commitments to force major European bank lenders to take a hit on debt.
The Irish Government is pumping another 24 billion euro (£21 billion) into the banks to keep them afloat but without burning senior bondholders.
Mr Noonan said that while they always wanted burden-sharing, they would only do it in consultation with the European Central Bank, which has ruled it out.
"We haven't broken our word," Mr Noonan said.
"We always said in the election that anything we did was under the umbrella of the European agencies and in consultation with the Central Bank in Frankfurt."
Detailing the massive cash injection - the fifth attempt to recapitalise the banks - Mr Noonan signalled junior bond holders who invested in Irish banks should be hit for five to six billion euro (£4.4 billion to £5.3 billion) in plans to finance the restructuring.
But he said Europe was unwilling to budge on senior bond holders - lenders at the top of the repayment queue when a bank fails.
The Finance Minister told state broadcaster RTE that the debate on burden sharing for senior bondholders at Allied Irish Banks and Bank of Ireland was now over.
"We always said we wanted burden sharing. But we would not do it unilaterally," Mr Noonan said.
"We would only do it with the agreement of Frankfurt and we didn't get the agreement."
Mr Noonan said targeting major European lenders could damage the banks' ability to tap into much needed cash down the road, claiming AIB and Bank of Ireland would now become the "lifeblood of a new economy".
"It would inhibit their capacity to get funds in the market in two and a half, three years time, if the people they are going to be seeking the funds from have shared in the burden, by burning the bondholders to use the expression," Mr Noonan said.
The massive 24 billion euro (£21 billion) cash injection is designed to win back confidence from international money markets who have been nervous about funding Irish financial institutions.
With the lion's share of the latest multi-billion euro bailout coming from taxpayers, most of Ireland's banking system will effectively be brought under State control.
The promised final bill for the banking clean up - 70 billion euro (£62 billion) - is half the value of the entire Irish economy.
The new coalition Government said it will vastly shrink the banking system from six homegrown lenders to two main "pillar" banks.
In a wave of tightly choreographed statements yesterday, Central Bank governor Patrick Honohan disclosed the amounts needed to safely buffer four banks against further shocks after long-awaited stress tests on the institutions.
Allied Irish Bank (AIB) needs 13.3 billion euro (£11.7 billion), Bank of Ireland needs 5.2 billion euro (£4.6 billion), building society EBS requires 1.5 billion euro (£1.3 billion) and Irish Life and Permanent needs another four billion euro (£3.5 billion), he announced.
Allied Irish Bank, once the country's largest bank, will merge with EBS to form the second main financial institution.
The plan will also see Irish Life & Permanent forced to sell off its lucrative pensions division Irish Life.
Shares in Bank of Ireland surged more than 20% when trading began today, but Irish Life & Permanent stocks slumped more than 50% while AIB also fell.
While senior bondholders at AIB and Bank of Ireland are not being touched, Mr Noonan has said there is merit in forcing bondholders at Anglo Irish Bank to share the burden on the huge losses.
Mr Noonan - who took office less than a month ago after his centre-right party Fine Gael formed a coalition with centre-left Labour - said Ireland had lost credibility across Europe but denied the country was being treated badly at EU level.
He claimed the banks had to be loaded with capital to restore that credibility.
"The European Central Bank is our central bank, but we have to negotiate every step of the way. We don't get everything," Mr Noonan said.
"But it would be unfair to say they're treating us badly. They're actually treating us very well.
"The biggest problem I had going out there was we have very little credibility in Brussels and across Europe.
"The policy makers do not believe Irish statistics, they do not believe Irish claims because there were too many claims in the past that didn't turn out."
Taoiseach Enda Kenny has said the results of the stress tests would now bring clarity and purpose to the Government's negotiations to ease the terms of the IMF/EU bailout.
Mr Kenny promised a "diplomatic onslaught" across Europe to renew connections.
Alan Shatter, Justice Minister, said forcing Anglo Irish Bank's lenders to take a hit had yet to be resolved.
"In fact there is burden sharing as part of this deal in the sense that the unsubordinated bondholders clearly are going to be affected by the outcome of what's occurred," the minister said.
"There's the issue of senior bondholders in Anglo Irish which remains to be addressed."
Mr Shatter said the Government was committed to further negotiations on the IMF-EU.
"I believe the decisions made by the Government, the decisive nature of those decisions, the restructuring of the banks, gives this country a genuine opportunity to rise like the phoenix from the ashes," he said.
"Yesterday was a first step in the measures necessary to give certainty with regard to banking issues."
Sinn Fein President Gerry Adams accused the Fine Gael/Labour coalition of pursuing the same "failed" policies of the former Fianna Fail/Green administration.
"Yesterday's announcement by Finance Minister Michael Noonan following the results of the bank stress tests makes it quite clear who is dictating the agenda and who is pulling this Government's strings," he said.
"A political decision has been made to inject a further 24 billion euro into a defunct banking system without any attempt to go after senior bondholders.
"The Government is continuing to pursue Fianna Fail's failed policies on the banks and they are now acting as little more than agents for the IMF in Ireland."
Mr Adams said the government was making ordinary citizens bear the burden of the debt.
"Rather than go after over 20 billion euro in unguaranteed bonds, the Government is making ordinary citizens bear the burden of this debt.
"Rather than act in the interests of the Irish people they are acting in the interest of the banks."
Trade union organisation Congress called for a meeting with Government on the bank restructuring plan.
General secretary David Begg said banks were a major employer of unionised staff and he wanted to state their case in talks with the Finance Minister.
"The Congress affiliated unions in banking are realistic about the future but at the moment they are flying blind as far as the precise implications for employment are concerned," Mr Begg said.
"I think what is needed is some structure that would allow the issues to be addressed, with a view to minimising the consequences for employees and their families."