Irish budget narrowly passes first hurdle while Martin takes Fianna Fail leadership

Ireland's minority Government has scraped over the first hurdle in its attempts to put Budget 2011 into law after securing independent support in the Dail.

Two independents agreed to back the Government in a last-minute deal, allowing the Finance Bill passed its first vote.

The controversial legislation – which will be the final act of the Government - looks set to go through the Dail and impose crippling tax hikes.

An 11th-hour meeting between Taoiseach Brian Cowen, Finance Minister Brian Lenihan and two rural independents ensured the Bill's safe passage.

Michael Lowry, Tipperary North TD, and Kerry South TD Jackie Healy-Rae won assurances from the Government on three fronts - a supertax on bankers' bonuses, revised tax relief for parents paying student fees, and the deadline for filing tax returns will not be brought back a month to September 30 as outlined in last Friday's Finance Bill.

The Government had already caved in over a draconian levy, the universal social charge, which will not be imposed on medical card holders.

Yesterday Mr Lowry demanded an immediate general election and warned that both he and Mr Healy-Rae were unlikely to support the Finance Bill.

Their support was vital as Fianna Fail lead a minority Government. The coalition fell apart at the weekend after the Greens withdrew from power but said they were committed to voting in favour of the Finance Bill.

The electronic vote in the Dail revealed the Government won by two votes - 80 in favour and 78 against.

But opposition party Fine Gael called for a "walk through" vote in the Dail to force TDs to openly declare for or against.

The walk through, which is the official record, showed a Government victory by three votes, 80 to 77, after independent Mattie McGrath abstained.

Later in the day and only a week after seeking a vote of no-confidence in Brain Cowen, former foreign minister Micheal Martin was elected the eight leader of Fianna Fail, ahead of other candidates Brian Lenihan, Eamon O Cuiv and Mary Hanafin.

Taking over the party in its current state is not likely to be an easy task with at least half of Fianna Fail's parliamentary seats at risk and Mr Martin refused to be drawn into speculation as to how many seats the party could hold, but he did maintain his desire to increase its support base.

Speaking at a press conference he described his new role as a "great honour" and thanked his rival candidates for the "spirit" in which the leadership race was held.

Mr Martin is due to set out his party's policies for the forthcoming election in the coming days with the tackling of Ireland's fiscal deficit expected to be to the fore.