Households will see 100 euro knocked off their first electricity bills of the year under proposals being brought to Cabinet next week.
It comes as data from the Central Statistics Office showed the annual rate of inflation rose to 5.3% in November, its highest in 20 years.
Consumers have been hit with 35 hikes to their energy bills in the past year, with households paying up to 1,300 euro extra.
The plan is being developed by Transport Minister Eamon Ryan, Finance Minister Paschal Donohoe and Public Expenditure Minister Michael McGrath.
Minister Donohoe stressed that nothing had been agreed by Government during an appearance on Newstalk Breakfast on Friday.
“Yes, we are looking at some options in relation to, ‘can we do something?’, particularly in relation to bills at the end of this year and the start of next year,” he said.
“I can’t confirm some of the things that have been reported here today because they haven’t gone to Government yet.”
Mr Donohoe denied it was a “populist” move to hand the subsidy to every home in the country, saying time constraints had prevented the Government taking more targeted measures.
“If you are trying to act quickly it is not always possible to be as targeted as you might be if you had more time,” he said.
“We are aware as always that if we do make a decision in relation to how we can help further with the price of energy we will try to do it in a way that is targeted, but at the same time I know these bills are going up,” he said.
After more than a decade of little or no inflation, we now see prices rising at a rate of more than 5% a year
The one-off payment will be made to every home in the country, and will cost upwards of 170 million euro.
The subsidy is expected to be paid directly to suppliers, who will deduct it from the household bills for the first two months of the year.
Tanaiste Leo Varadkar told the Dail on Thursday the Government would develop specific measures to tackle increases in gas and electricity prices, which have skyrocketed in the past year.
He said: “The cost of living in Ireland is rising, it’s rising very fast.
“After more than a decade of little or no inflation, we now see prices rising at a rate of more than 5% a year. I don’t think we’ve seen that maybe in 20 years.
“That’s very much driven by increases in fuel prices, increases in energy prices.
“The Government is very aware of that. We know it’s very difficult for a lot of families, who are trying to make ends meet, trying to find enough money to pay the bills at the end of the week or at the end of the month.”
He added: “Now we’d certainly like to do something that would help with electricity bills and maybe gas bills as well.
“Minister Donohoe, Minister McGrath and Minister Ryan are working on that at the moment.
“We’d hope to be in a position to make a decision on that in the near future, so that people will see the effect of that in the bills that they receive in the new year, being a little bit less than perhaps they expected.”
He outlined a number of measures to take effect in January that would also help households.
He said: “We do need to help and Government is helping in at least four ways: pay increases, welfare and pension increases, a reduction of personal taxation and also help with the cost of living for a number of services.”