Update 10.15am:Dr Shari McDaid, Director of Mental Health Reform, says the raiding of funds is unacceptable.
She said: "This is now the second time of, in a sense, the mental health funding being raided, funding that was intended for new developments.
"It's really unacceptable, it doesn't reflect parity of esteem in the health services between mental health and physical health, and it just shouldn't happen."
Earlier: The Department of Health is said to be considering moving funding ring-fenced for mental health services to more politically sensitive areas.
The Irish Times reports Kathleen Lynch, the former junior minister with responsibility in the area, has written to the head of the Department urging him to defend the €35m.
The newspaper reports Ms Lynch has told him considerable effort was made to secure the money in Budget 2016 in the first place.
She also says under the previous programme for Government it must be protected.
It is is likely to go to the hospitals' budget, as waiting lists and the numbers on trolleys are still going up.