It will soon be illegal for the Government to invest pension funds in companies linked to cluster bombs.
The Coalition is drafting new legislation to pave the way for an international agreement banning the use of the munitions.
The bombs have been blamed for countless civilian deaths over several decades in war zones like Lebanon and the Balkans.
A treaty was brokered among more than 100 countries at a 12-day diplomatic conference held at the Croke Park Conference Centre in May.
The Government said today that it will introduce legislative measures to stop the National Pension Reserve Fund investing in firms involved in the manufacture, distribution or sale of cluster bombs.
The issue was agreed at today's Cabinet meeting - the first since the August break.
"The legislation is expected to come before the Dail in advance of the signing of the international treaty in Oslo in December," said a Government spokesman.
Ireland is part of a core international group which spearheaded moves for an international ban, alongside Austria, Mexico, New Zealand, Norway, Peru and the Vatican.
Military superpowers like US and Russia will not be signatories to the new treaty, which will also prohibit the transfer and stockpiling of the bombs.