In a major reversal of policy, the Government has agreed to end the freeze on research spending at third level, after a sustained campaign by university presidents and the Higher Education Authority (HEA).
In next week's Estimates, the Government will commit over €140 million to the Programme for Research in Third-Level Institutions (PRTLI).
A further €58 million will be available from the private sector.
Unusually, both the Tánaiste, Ms Harney, and the Minister for Education, Mr Dempsey, revealed details of the decision ahead of the publication of the Estimates next Thursday. Ms Harney signalled it on RTÉ Radio's Morning Ireland and it was later officially announced by Mr Dempsey.
The commitment means colleges can now build essential infrastructure and facilities. It also means that they can draw down some €50 million committed by the Irish-American philanthropist Mr Chuck Feeney, as the State is now providing matching funds.
The decision follows weeks of feverish activity involving Mr Dempsey, Ms Harney as well as academic and business leaders. The decision to provide funding for the PRTLI in next year's spending Estimates was taken by the Cabinet on Tuesday.
Sources say the Taoiseach, Mr Ahern, backed the case made by university presidents that additional research funding is essential for economic growth and international competitiveness.
Last night, Dr Seamus Smyth, on behalf of the seven university presidents, congratulated Mr Dempsey "on his announcement that the government would fund the Cycle 3 of the PRTLI."
"The universities see the decision as a reaffirmation by the Government that investment in higher education research is pivotal in driving Ireland's development as a front-line competitor in a global knowledge-based economy.
"We are also anxious to acknowledge the important role played by the Taoiseach and the Tánaiste in supporting Minister Dempsey in securing government agreement to fund PRTLI", Dr Smyth said.
"While the past year has presented very significant difficulties for the universities in maintaining momentum within our research programmes, the restoration of PRTLI funding now means we can look forward with confidence," he said.
HEA chairman Dr Don Thornhill said the authority "regards the decision as a very clear manifestation of the Government's commitment to the knowledge society which is so critical for Ireland's future social and economic progress.
"The HEA is particularly pleased that the Government has responded in such a positive manner in the light of the current challenging financial circumstances".
He said the commitment to sustained funding up to 2008 "is excellent news for our higher education institutions, the research community and for Ireland's future."
The Council of Directors of Institutes of Technology also warmly welcomed the decision. Its chairwoman, Dr Mary Meaney, noted how an increasing number of institutes "have successfully competed for these research funds since the inception of PRTLI, and it is expected that the coming years will see even greater participation by them".
She added: "This research funding is vitally important in the context of our national spatial strategy and the institutes located in every region of Ireland are ideally suited to provide the research infrastructure vital to achieving Government regional development objectives."
