Rent freezes for hard-pressed tenants could soon be introduced, with Fianna Fail set to drop its opposition to the controversial policy.

During the General Election campaign, Fianna Fail insisted rent freezes were not legally possible and would interfere with property rights.

However, following its first day of government formation talks with the Green Party, it is now considering the introduction of short-term caps on rents.

"We are open to negotiation and agreement on it because we realise people deserve to see some immediacy to help renters rather than pawn them off with a legal opinion," a senior Fianna Fail source said.

A Green Party source confirmed the issue was noted among many other policy areas discussed during more than six hours of talks.

Fianna Fail is prepared to examine whether a two-year rent freeze, which was introduced by the then housing minister Alan Kelly in 2015, could be implemented again.

The two parties also discussed rent pressure zones and tax incentives for landlords offering long-term leases.

Fine Gael has insisted rent freezes do not work and are unconstitutional.

A national rent freeze was a key element of Sinn Fein's election manifesto.

The issue is sure to be centre stage when Fianna Fail leader Micheal Martin and Taoiseach Leo Varadkar meet to discuss policy matters next week. In a phone call yesterday, Mr Varadkar told his Fianna Fail counterpart he did not believe there was "sufficient basis" for appointing a negotiating team or beginning programme for government talks.

However, they agreed a "one- day policy exchange" on housing, health, climate change, the cost of living and taxation.

Opposition

At a parliamentary party meeting, Mr Varadkar said it was still his plan to lead Fine Gael into opposition and insisted the onus was on the other parties to form a government.

There was strong support for his view at the meeting, TDs said afterwards.

Communications Minister Richard Bruton reiterated his position that Fine Gael should not go into government.

"Bruton was particularly strong in saying this was not a space we should be going into," one TD said.

Junior Minister John Paul Phelan said that for the past four years there had been radio debates where everyone on the panel was against the Fine Gael representative and that it was time for those people to form a government.

Retiring senator Paul Coghlan spoke in favour of going into government with Fianna Fail, arguing it should be done in the national interest.

Fine Gael TDs and senators were asked to put their phones into a box before the parliamentary party meeting to prevent any leaks.

Separately, significant differences have emerged between the Green Party and Sinn Fein on tax matters following two days of exploratory talks.

Sinn Fein opposes increases in the carbon tax, wants to abolish the local property tax (LPT) and abolish the Universal Social Charge for anyone earning up to €30,000.

Sources said Sinn Fein is, as it stands, "not for turning" on its opposition to carbon tax hikes, while the Greens are against new tax cuts or abolishing LPT.

The Rural Independent Group held talks with Fianna Fail and Sinn Fein yesterday.

The alliance of Independent TDs said they wanted an overhaul of the penalty points system in return for supporting the next government.

However, this was immediately ruled out by Sinn Fein.