The Department of Justice confirmed no more than three single people will share a room in a direct provision centre from now on.
It says this policy will remain in place even when the Covid-19 crisis is over.
"As part of our response to the Covid-19 pandemic, which has been positively acknowledged by the Ombudsman in terms of the speed of our response and specific actions taken, we have opened new accommodation and relocated over 600 residents to support social distancing in centres and cocooning measures for the most vulnerable," the Department said.
"By doing this, we have ensured that a maximum of three single people are sharing a room in any of our centres. We were pleased to be able to confirm to the Ombudsman before the publication of his Report that we intend to continue this policy when the crisis is over."
The Department says 600 residents have been relocated to allow for proper social-distancing during the pandemic.
It was responding to concerns raised by the Ombudsman. Peter Tyndall has expressed his concerns over the unsuitability of accommodation in the direct provision system.
He said the Covid-19 crisis further highlighted how unsustainable it is to have three or more people, who are not from the same family, living in the same room for a significant amount of time.
"Current direct provision accommodation is not appropriate for anything other than short-term stay," Mr Tyndall said.
"Emergency accommodation is even more inappropriate. It is unacceptable that people who have sought refuge here can find themselves in accommodation that is entirely unsuitable for a prolonged period – up to 16 months and longer in some cases."
Irish Refugee Council has welcomed the Ombudsman’s annual report.
"He clearly has grave concerns about the direct provision system which echo what we and many others have said for some time, the organisation said.
“In particular the report raises serious concerns about the use of emergency accommodation and the problems people experience while living in it: location, schooling, food, sharing of rooms and laundry facilities. As an organisation we have been working with people living in such accommodation for the last year and a half and have also seen many of these issues."
The Department of Justice noted: "that our programme of improvements must be continuous and that there is more for us to do. This includes our ongoing efforts to reduce the number of residents in emergency accommodation as well as the length of time that residents spend in emergency accommodation. "
The Department said it is working with local authorities and the City and County Managers Association to assist direct provision residents to transition into mainstream accommodation.