Leo Varadkar is open to forming a national unity government, as long as it does not involve Sinn Fein, the Sunday Independent can reveal.

Mr Varadkar, the acting Taoiseach, is prepared to begin negotiations with every other party and Independent TDs, about forming a government to deal with the Covid-19 pandemic. However, he will not enter into an arrangement involving Mary Lou McDonald's Sinn Fein.

The unity government being proposed would remain in place for the duration of the national health crisis and the first phase of the recovery.

The significant shift in Mr Varadkar's position follows Green Party leader Eamon Ryan doubling down on his call for a national government after his TDs ruled out entering into coalition with Fianna Fail and Fine Gael.

A source close to the Fine Gael leader said Mr Ryan's proposal is being given serious consideration in the senior ranks of the party. "We haven't ruled out his proposals, but it can't involve Sinn Fein for obvious reasons, which ring even more true in an emergency," a senior Fine Gael source said.

The source pointed to Sinn Fein leader in the North, Michelle O'Neill, backtracking on a decision to keep schools open as a reason for excluding the party from a unity government.

"We only saw last week how Michelle O'Neill took a collective decision in the Northern Executive, defended it and was then overruled overnight," the source said.

Ms O'Neill and Democratic Unionist Party (DUP) leader Arlene Foster had agreed not to immediately close schools as part of their plan to tackle the coronavirus. The decision was based on advice from public health officials in the North. However, 24 hours later, the Sinn Fein deputy first minister changed her stance and insisted on closing schools in line with the policy in the South.

A senior Fine Gael source noted that other European countries excluded far-right and populist parties when forming national governments.

Last Friday, Ms McDonald suggested she would be open to form a unity government, despite previously suggesting she was not interested in the proposal.

"There is merit, of course, in all of the political forces coming together because we all represent different sections of our people, whatever our views on other political matters," she said.

However, she added that her preference was still a government which "reflects the outcome of the last election".

Fianna Fail leader Micheal Martin is not in favour of forming a national government.

The Fianna Fail and Fine Gael leaders are eager to convince the Green Party to join them in government and there is ongoing contact between the leaders of all three parties.

Mr Ryan has suggested Mr Varadkar would remain Taoiseach if a national government was established.

The Green Party leader also believes Simon Coveney should remain foreign affairs minister and Simon Harris should stay on as health minister.

The proposition was dismissed yesterday by senior Fianna Fail figures who insisted Mr Martin still believes a coalition government is the best option for the country.

However, high-ranking Fine Gael sources indicated they are open to Mr Ryan's plan.

Meanwhile, the first cracks in the cross-party support for the caretaker government's response to the Covid-19 crisis emerged yesterday as Fianna Fail's finance minister Michael McGrath criticised the lack of supports for workers and businesses.

Mr McGrath described the economic response as "piecemeal, underwhelming and poorly executed" when compared to other countries who are dealing with the pandemic.

In a statement, he said: "The response of the Irish Government to date for the workers and businesses affected by the economic fallout from Covid-19, falls well short of what might reasonably be expected.

"This is the consensus among both unions and employer bodies. Comparisons with the actions of other national governments across the EU highlight starkly the inadequacies of what has been done so far here. With potentially hundreds of thousands of workers losing their jobs, the Government here has to do a lot more."