Legislation to reduce the bankruptcy term from three years to one year will be in place by the end of the Dáil term, Taoiseach Enda Kenny has said.

Mr Kenny told the Dáil the Government has accepted the need to reduce the term from the recently introduced three years to one year.

He said Minister for Justice Frances Fitzgerald would be bringing legislation to Cabinet in the next number of weeks.

The move had been championed by Labour Longford-Westmeath TD Willie Penrose, and was backed by the Labour parliamentary party.

However, it was opposed by the Department of Finance and did not feature in the Government's mortgage arrears package earlier this year.

‘This is critical’

Mr Penrose said: “This is critical. The current situation where it is three years’ bankruptcy here and one year north of the Border is rather silly and impractical.

“This is something the Labour Party has supported and called for and I am pleased to see it will now happen.”

When adopted, this would bring Irish bankruptcy law into line with laws in the UK.