The plan will initially be "tailor made for Irish banks" the source said and is likely to be announced next week to dovetail with the stress test results of Irish banks.

"This will replace the ELA (Emergency Liquidity Assistance) that is currently being provided by the Irish central bank," the source said speaking on the condition of anonymity.

"It will probably be similar to the SMP (ECB bond buy programme) in the sense there will be no fixed time frame on it, if you had put a 5 or 10 year deadline on it these people may have been tempted to ignore the problem until the end date was approaching."

He added that although it would intially be tailored for Irish banks, it would subsequently be available euro zone wide.

It would be under the control of the ECB's Governing Council who would set the conditions attached to the loans on a case by case basis.