Such a move would lead to harsh financial controls again being imposed by the troika, even if the backstop money never needs to be drawn down.

The latest twist in Ireland’s ongoing bailout drama came as EU leaders appeared to row back on plans for a banking union and in particular on setting up an EU fund to rescue or wind up failing banks.

This threatened delay renewed pressure on the Government to accept an emergency credit line.

Mr Kenny wrote to his fellow EU leaders ahead of a two-day EU summit in Brussels reminding them of their promise last year to break the vicious circle between banks and governments, whereby taxpayers ended up bailing out banks.

“All the commitments we made then remain to be fulfilled and are important for ensuring that Ireland’s return to full market financing is sustainable and that Ireland can be a durable success story for the entire eurozone,” said Mr Kenny.

However, under German pressure, it looks as though the summit will pull back from allowing the ESM, the EU’s rescue fund, to help fill any gaps in banks exposed by upcoming stress tests.

The only option then would be for governments to borrow from the ESM for their banks, leaving the taxpayer responsible for repayments once again.

There may be little progress on the political aspects of a banking union until the December summit, some officials believe.

At the summit, Mr Kenny said the emphasis was on exiting the bailout in “a sustainable and durable fashion”.

Asked if conditions attached to a credit line would be a deal breaker in the Government’s decision, Mr Kenny said: “You would not want a situation where the conditions being imposed were as constraining as the programme itself.”

The Government has been sending mixed signals to the troika on whether it wants a credit line, but appears to have been reassured by the ECB that while there will be conditions, they will not be too onerous.

The ECB would prefer to see Ireland taking the credit line in case the market turns sour or the banks require funding. It would then be able to have the ESM raise the money for them.

However, Germany would prefer Ireland not to tap the fund, as the request will have to be passed by the Bundestag in advance. German finance minister Wolfgang Schäuble said a clean exit would look better and engender more confidence in the country.

The ESM has confirmed there will be conditions attached to a credit line, which are likely to take the form of further extending some of the measures in the bailout programme, such as labour reform, further liberalising the medical or legal profession, or dealing with bad bank loans.

Finance Minister Michael Noonan held talks with the ECB and the European Commission during the week about easing Ireland’s entry back into the markets. He is due to meet the third member of the troika, the IMF, in Washington on Monday.