The Taoiseach Mr Ahern will face a difficult task in rallying his troops at a gathering of the Fianna Fβil parliamentary party which takes place in Ennis today.

The special seminar is intended to fire up deputies and senators for the general election. But compared to a similar gathering in Kilkenny this time last year the message from Mr Ahern will surely be more downbeat.

The Government's economic woes were significantly increased yesterday. Added to the fall off in the technology sector and the turmoil in the markets was the news of the Aer Lingus lay offs.

Aer Lingus has always been a political hot potato. This latest news, where a number of job losses will be concentrated in a small number of areas, particularly north Dublin, will cause unease among backbenchers.

In 1993 the Fianna Fβil/Labour government felt the pressure when job losses were proposed, under the Cahill plan, at Aer Lingus and also TEAM Aer Lingus.

Labour party backbenchers Mr Tommy Broughan, Mr Sean Kenny (no longer a TD), Mr Derek McDowell and Mr Sean Ryan lost the whip after failing to support the Government in a Dβil vote on the issue.

The Fine Gael Deputies for Dublin North Ms Nora Owen and Dublin North Central Mr Richard Bruton said in a statement yesterday they hoped that such a drastic cut in services and the loss of 1,000 permanent jobs would only be necessary in the short term.

They said it was a devastating blow for those who will lose their jobs and for their families, many of them living in concentrated areas in North Dublin, Cork and Shannon. Aer Lingus has been suffering a decline in recent years and was particularly vulnerable to this downturn in business, they said.

"The loss of 1,600 jobs, many of which will affect people in North Dublin coming on top of the closures of Motorola in Swords and Gateway in Coolock in the last year will have a devastating consequence to the people concerned and to business generally in the area."

There was also some opposition criticism that Mr Ahern did not mention the job losses when he addressed the special sitting of the Dβil yesterday but a spokesman said he had only been informed of the development by Ms O'Rourke afterwards. The matter was apparently not discussed at yesterday morning's Cabinet meeting.

The Labour Party chief whip Mr Emmet Stagg said last night that it had been probably inevitable there would have to be some scaling down of operations following the events in the US but said the extent of the cutbacks was "truly shocking".

No government minister, he claimed, who has ever had responsibility for the airline industry has done as much damage to Aer Lingus as Ms O'Rourke.

"Aer Lingus was in serious difficulties before the appalling events in the United States last Tuesday which have created a whole new range of problems for the airline industry. And many of those problems arose directly from her mishandling of the company's affairs. The Minister's determination to sell off the company by any possible method - privatisation or trade sale - sapped the morale of management and workers alike who had done so much to ensure the company's recovery."

The Government, he said, must also make it clear to the EU Commission that our unique status as the only member state with no road link to the European mainland "created a specific case for the State to be allowed to retain and invest in a national airline, especially in the light of the new problems it now faced, in common with other airlines."

The Government is clearly open to this idea. Ms O'Rourke said last night there would clearly be an unfair advantage if US airlines were to receive State assistance and those in the EU did not.

"It is an issue myself and the Government would be very willing to talk about," she added.