The Government's transport strategy, including the Luas project in Dublin and organisational changes in CIE, are likely to be discussed at an all-day Cabinet meeting this month.
The meeting will discuss the political situation and policy developments for the next year and is likely to be held in Waterford.
The Minister for Public Enterprise, Ms O'Rourke, has indicated her preference for separating CIE into three individual companies with their own organisational structures.
The proposal would require legislation. It will be discussed by the Cabinet before going to the Cabinet sub-committee on infrastructure next month.
Ms O'Rourke is understood to be concerned that CIE's unwieldy organisational structure could have a negative impact on the company's ability to deliver on the £2.3 billion commitments for public transport in the National Development Plan.
The Progressive Democrats this month published a policy document calling for movement along the lines now being argued by Ms O'Rourke. Senator Helen Keogh last night welcomed "the decision" to change CIE's organisational structure and was delighted that Ms O'Rourke had "taken the PDs' advice to split up CIE into three autonomous companies".
However, the PDs want each of the separate companies to have full operational autonomy, full financial independence and full commercial freedom, including the freedom to compete with each other.
Ms O'Rourke told the Sunday Business Post that while three new companies would have their own boards and chairs, the workers would remain employed by CIE so as to protect their pension rights and other entitlements.
Opposition parties were last night critical of the new policy direction. The Fine Gael spokesman on public enterprise, Mr Ivan Yates, questioned how the delivery of public transport would be improved. He said the Minister was engaged in "confusion public relations to divert from the political difficulties she has found herself in with CIE".
The Labour Party spokesman, Mr Emmet Stagg said: "With the PDs sniping in the wings, public transport policy becomes less focused and more confused with each passing day".
The Cabinet sub-committee on infrastructure will also deal with long-term strategy for public transport in the capital, including the feasibility of an underground metro system.
A spokesman for the Department of Public Enterprise dismissed reports that any proposals for a metro system would replace the Luas light-rail project. "There are no changes to plans for Luas. Work is on schedule, and Luas is going ahead," he said.
However, it is believed the feasibility of an underground metro system as a long-term solution to transport in Dublin in tandem with Luas has support within the Government.
One official source yesterday said the ability of Luas "to do the full job was a question that had not been properly answered".