The Irish League of Credit Unions is understood to have deferred plans to disaffiliate 12 credit unions next weekend.

The U-turn follows notification from the Competition Authority that any moves to proceed against the rebel members would see the league facing immediate court proceedings.

The authority is further understood to have informed the league that it has three months to change its rules so that the Savings Protection Scheme at the heart of the dispute is at arms' length from the control of the ILCU board.

The issue will be discussed today at an emergency meeting of the board of the ILCU. A management committee, which had been due to meet today, will be augmented by the remaining board members to discuss the latest letter from the Competition Authority, which has been at odds with the league over its insurance provider. The authority says the league's insurance provider, ECCU, is operating as a monopoly.

The 12 credit unions under threat of disaffiliation fell foul of the league's rules by refusing to do business with ECCU.

The league's 535 member unions are obliged to take out loan protection insurance with ECCU to cover their financial exposure through loans to their 2.6 million members.

However, some have complained that the rates charged by ECCU are up to 30 per cent above the market average. The league has traditionally been funded with ECCU's profits.

While the immediate threat of disaffiliation has been removed from the 12 credit unions, it is understood that their representatives will meet the board of ILCU next weekend as planned.

The row between the ILCU and the 12 unions erupted when the Competition Authority revoked a certificate that said the league's obligation on members to deal with ECCU on insurance cover did not run counter to legislation on competition.

The league subsequently received legal advice that the requirement did not breach competition law. At that stage, disaffiliation proceedings began against the 12 member unions.

Many of the unions involved in the dispute are in fast-growing urban centres in and around Dublin. They include unions in Blanchardstown, Dundrum, Coolock-Artane, the DubCo credit union in Dublin City Council and St Agnes's in Crumlin-Drimnagh. Those outside Dublin are: Bray and Greystones in Co Wicklow; Newbridge, Co Kildare; Mullingar, Co Westmeath; Dundalk, Co Louth, St Anthony's in Claddagh, Co Galway; and Comhar Linn credit union in the Irish National Teachers' Organisation.

A spokesman for the ILCU last night would only confirm that the issue would be discussed today.