Consultant psychiatrists tonight agreed to take their places on Mental Health Tribunals, set up to review involuntary detentions of mental patients.
Doctors had refused to join the boards insisting they needed replacements while they were assisting the tribunals.
But tonight Tanaiste and Minister for Health Mary Harney announced a deal with the Irish Hospital Consultants Association (IHCA) and the Irish Medical Organisation (IMO) had been agreed.
Consultants and clinical directors were facing fines of up to €1,500 or two years in jail. The Government also threatened to withhold a 1.5 per cent pay rise for the state's 290 consultant psychiatrists, along with all public servants, due under Sustaining Progress. Ms Harney said the money would now be paid.
The tribunals, which will comprise a consultant psychiatrist, a lawyer and a lay person, will review orders to detain people involuntarily in psychiatric hospitals.
Around 3,500 patients are involuntarily detained in psychiatric units in Ireland each year - one of the highest rates in Europe. The tribunals will review the cases of those involuntarily detained.
"The establishment of the Mental Health Tribunals, together with the continuing investment programme and the new policy document to be launched tomorrow, are the three key elements in the modernisation of our mental health services," she said.
Provision for the tribunals was made in the 2001 Mental Health Act designed to bring Irish law into line with the European Convention for the Protection of Human Rights and Fundamental Freedoms.
The agreement represents a small thaw in the icy relationship between the Government and consultants.
However, both sides are set to adopt tough positions at talks on new hospital consultants' contracts due to begin this Thursday.
The most controversial Government proposal is a new "public hospital-only contract" which would prevent specialists from receiving payment for treating patients privately.
Ms Harney has threatened to impose the contracts if agreement is not reached but Irish Hospital Consultants' Association has said it will not "be bullied or browbeaten".
Additional reporting PA