The EU has agreed to review Ireland’s bank debt deal by October, prompting delighted Dublin ministers to claim they now have an opportunity to renegotiate the “disastrous deal” struck by the last government.

The announcement was made by the European Commission Vice President Olli Rehn early on Tuesday after more than nine hours of discussions in Brussels overnight.

Euro zone finance ministers will take a final decision in October to provide an unspecified amount of bank debt relief to Ireland.

The unanimous move to set the deadline marks a step forward in the government’s long campaign to reduce the burden of the state’s €60 billion-plus banking debt.

Although the mechanism to be deployed and the amount of relief in play remain unclear, the European Commission will develop concrete proposals to be submitted to the ministers in September.

Rehn told reporters in Brussels, “That’s very positive. It’s positive for Ireland, for its chances of succeeding in its reform programme and thus it’s positive for the whole of Europe.”

The move by the euro group came as Minister for Finance Michael Noonan pressed for a speedy deal to revise the bank rescue and linked the question to an International Monetary Fund review of Ireland’s bailout later this year.

This is a crucial procedure under the IMF’s own internal rules as it does not lend to countries judged to have an uncertain funding profile over a 12-month horizon.

Any deal to improve Ireland’s debt sustainability in a significant way would increase certainty over the government’s finances by improving the prospects for a definitive return to debt markets as the bailout ends next year.

Rehn added that the EU decision would help to improve the debt sustainability of Ireland and “thus make Ireland a success story again.”

Tanaiste (deputy leader) Eamon Gilmore said a lot of negotiation is to take place between now and October to maximise the benefits for the Irish people in any deal that may be struck on Ireland’s debts.

Minister of State for European Affairs Lucinda Creighton said, “We will certainly be ensuring that we get the best possible deal for the Irish people.  It is too early to say how that will be constituted, what form the deal will take but that technical work is well underway now and I’m very optimistic that we will make significant progress on it in the autumn.”

EU Commissioner Olli RehnAP