Ireland’s largest opposition party, Fianna Fáil, will respect a “political ceasefire” to allow Fine Gael’s Enda Kenny to continue as taoiseach, sources inside the party said on Sunday night after most of the votes had been counted in the most indecisive Irish general election for decades.

Fianna Fáil will not enter a coalition with its rival but will avoid bringing down a minority Fine Gael-led administration in the short to medium term, the Guardian has learned, after an election that has produced no possibility of any coalition holding a majority.

This would allow Kenny to remain as prime minister for the centenary commemorations of the 1916 Easter Rising and for Fine Gael to govern for at least a year, thus avoiding another election in the new few weeks or months.

Irish election results show Fine Gael misread public mood Read more

The Dáil will meet on 10 March to elect a new taoiseach but no new government, not even an minority one, is expected to be formed until the end of the month.

In return Fianna Fáil would reform the Irish parliament, allocating more powers for members of the Dáil, or TDs, to scrutinise government legislation and crucially allowing the opposition to have some input into the shape of this year’s budget.

“There are two things in Ireland that bring any government down: a vote of no confidence and a government’s inability to set a budget. If conditions are met to allow for real Dáil reform and the opposition is allowed to scrutinise and have input in relation to the budget then there will be no votes of no confidence,” one veteran Fianna Fáil source said.

Fianna Fáil expects to re-enter Dáil on 10 March with about 42 to 44 seats, while Fine Gael will still be the largest party with about 51 to 52 seats, the source said.

There has been pressure for Fianna Fáil and Fine Gael, mainly from Dublin media commentators, to form a “grand coalition” along the lines of the Christian Democrat-Social Democrat government in Germany, and in turn bury the bitter divisions between them that are rooted in the Irish civil war.

Instead, there is likely to be a political truce that will last for at least a year if Fianna Fáil’s conditions are met. But the party would not take up any ministerial positions or sit in a cabinet with Fine Gael having the final say in decisions.

“Fianna Fáil would still be on the opposition benches and still holding a minority Fine Gael government to account,” the source said.

Another source saidit would be “utter madness” for Fianna Fáil to link up officially with Fine Gael in government and hand over the leadership of the opposition to Sinn Féin.

The leader of Fianna Fáil, Micheál Martin, who is widely regarded to have had the best campaign of the four main party chiefs, as well as former Fianna Fáil ministers such as Willie O’Dea and a number of newly elected TDs, have come forward over the weekend to dismiss speculation of formally joining Fine Gael in government.

By early evening Sunday, the breakdown in terms of seats for the parties was projected as: 51 for Fine Gael, 44 for Fianna Fáil and Sinn Féin on 24, Others, ranging from left-wing parties to independents, are expected to win 34 seats and Labour five.

For Kenny and Fine Gael this has been a disastrous election, given that they and their Labour coalition partners took power five years ago with the largest majority in post-independence history. Fine Gael had 73 seats and will lose at least 20, while Labour has crashed from a historic high of 33 in 2011 to under 10, possibly even as low as six seats.

One of the biggest casualties of the backlash against Fine Gael in particular was the loss of a seat for Dr James Reilly, who was minister for health between 2011 and 2014. He lost Dublin Fingal to Sinn Féin and acknowledged that this was mainly due to the austerity cuts the coalition imposed to plug the hole in the national finances.

“My time in health would not have been exactly helpful. But the country had no money and hard decisions had to be made,” Reilly said.

He avoided questions at the Fingal count about the future of Kenny’s leadership and conduct during the campaign. The electorally bruised taoiseach, portrayed in one newspaper today with his head superimposed on a picture of a badly injured Irish rugby player, performed poorly in all three live television debates in the three-week battle.

Sinn Féin has been a big beneficiary of Labour’s catastrophic drop in support, with Gerry Adams’s party up to 14% of the vote and about 24 seats. But other leftwing parties such as the Anti-Austerity Alliance, People Before Profit and the Social Democrats saw their share of the vote and seats rise. However, Sinn Féin’s aim of supplanting Fianna Fáil as the leading opposition force at the ballot box in the year of the Easter Rising centenary has not been realised.

The deputy leader of Sinn Féin, Mary Lou McDonald, challenged the two major parties to coalesce in a new government while emphasising that her party had no interest in entering any administration with either of them.

“We will not be the facilitators or enablers of Fianna Fáil or Fine Gael to run rampant across an unequal society – in other words we are very different from Labour in that respect,” the Sinn Féin TD said.

Meanwhile, a former media adviser to Fine Gael and PR campaign director for President Mary Robinson in the early 1990s has criticised the party’s decision to hire consultants from the British Conservative party for the election.

Eoghan Harris, who helped run Robinson’s successful election to the Irish presidency in 1991, said: “The coalition brought in Tory advisers. But political advice is seldom a ‘one-size-fits-all’ affair and I doubt they understood Irish political culture … The very fact that Fine Gael thought Tory advisers could help showed how totally out of touch with Irish people they are.

“Possibly influenced by Tory consultants, Fine Gael ran a low-tax campaign that presumed a selfish electorate. In contrast, Micheál Martin, leader of Fianna Fáil, took a huge risk and prioritised public services over tax cuts. Recent polls confirmed that Martin read the public mood right as a big majority put improved health and social services well above tax cuts.”

Some of the counts across the 40 constituencies of the republic are expected to continue until Monday due to Ireland’s single transferrable vote system. One illustration of the marathon nature of the counts can be seen in Dublin Central, where the last seat was won by the independent candidate Maureen O’Sullivan, who had to wait until the 11th count in the early hours of Sunday morning before it was confirmed that she was going back to the Dáil.