Fianna Fáil leader Micheál Martin has indicated his party will be seeking increased third-level funding in the October budget.

Mr Martin told the Dáil on Wednesday the Government should reflect on the need for "significantly increased State funding'' for the sector. He called for the restoration of grants to post-graduate students.

Taoiseach Enda Kenny said the Cassells report on the funding of third-level education would be discussed by the Oireachtas education committee.

“There is always the balance between the output of what can come from universities and the challenge that is there for providing sufficient money for it,’’ he added. “We did not have this capacity for quite a number of years.’’

Mr Kenny said he did not want to predict the budgetary outcome, but the report would be considered very carefully. It was an issue which concerned the Government, he added.

Mr Martin said the report had recommended an immediate increase of €120 million investment in the sector annually over the next five years. It had also called for an investment of €5.5 billion over the next five to six years on capital infrastructure.

He said third-level funding was in a very seriously difficult situation. The pupil-teacher ratio had progressively worsened and there was little capital investment.

“The central role of third-level education in Irish economic development is not reflected in current Government policy and has not been for quite for some time,’’ he added.

Mr Martin said the Cassells report had highlighted much of this and had also pointed to the urgent need to restore and enhance the quality of the education.