Ireland is set to nationalize two or three more banks under sweeping new plans announced Tuesday.

Taoiseach (Prime Minister) Brian Cowen said the plan was not about bailing out the banks, but rather about bailing out the Irish economy.

Finance Minister Brian Lenihan - who is being treated for pancreatic cancer - said he wanted to tackle this problem "once and for all."

Lenihan told the Dail (Irish parliament) that he wanted all banks to reach a level of 8 percent tier 1 capital.

He did not specify how much this would cost although the changes will see billions of euros worth of toxic housing loans from the main five Irish banks into the so-called bad bank, NAMA, the National Asset Management Agency.

Sources say the Government is set to take a majority shareholding in Allied Irish Banks and more shares in the Bank of Ireland.

The Irish state already has a 16 percent stake in Bank of Ireland, a 25 percent indirect stake in Allied Irish and full ownership of Anglo Irish Bank.

Speaking Monday, Lenihan said Ireland could manage on its own.

"We have a new regulator who is defining what they should have in terms of their capital reserves," he said.

"Secondly, we have gone in and explored the black holes through the National Asset Management Agency. We see where the losses are impending.

"And thirdly, the Irish state has established its own credibility as a state that can manage its own finances. There is huge international recognition of that now.

"And we need to translate all that international confidence into the banking sector as well, and sort it out once and for all."

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