All funding for Scouting Ireland has been suspended "for as long as the current Board of Directors remains in place".
The announcement was made by the Minister for Children and Youth Affairs Katherine Zappone today.
Minister Zappone made the decision after the board voted to reinstate chief scout Christy McCann as the chair of an upcoming emergency meeting.
Mr McCann is one of those under investigation in relation to the organisation's handling of a rape allegation.
In a statement, Minister Zappone said she was "very concerned" about recent events, particularly the vote taken last Saturday to reinstate Mr McCann for an October 6 EGM.
She said she has since received correspondence from the interim Chair of the Board, Annette Byrne, and also from Ian Elliott, a child safeguarding expert, which caused her "grave concern".
Ms Byrne indicated to the Minister that based on Saturday's vote, "she cannot have confidence in the current Board to act impartially when the current independent investigation is completed".
"Mr Elliott, who has worked in the area of child safeguarding for more than four decades, was appalled by last Saturday’s decision and it reinforced for him the view that there are Directors who have consistently sought to obstruct essential change within the organisation," Minister Zappone said.
"Mr Elliott pointed out his strong view that bad governance generates risk to young people. As Minister I cannot accept such a situation.
She said she had been assured by both Mr Elliott and Ms Byrne do "an excellent job", as do the "vast majority of volunteers involved in Scouting Ireland", and are "utterly committed to the safeguarding of scouts".
Minister Zappone reassured parents that her actions today "stem from bad governance and are in no way connected to the fantastic work being carried out by Scout groups and Scout leaders and volunteers throughout the country".
"I have been assured that they are committed to and compliant with the highest possible level of safeguarding standards," she said.
She acknowledged the support of Ms Byrne in her role and her "absolute commitment to the essential governance changes required", as well as to Mr Elliott "whose guidance of the organisation in developing the strongest safeguarding policies possible has been and continues to be invaluable".
"This is a crucial moment for Scouting Ireland – I urge the Directors to do the right thing for the future of the organisation and for the future of scouting in this country and to serve the best interests of young people," she concluded.
Labour Spokesperson on Children and Youth Affairs Sean Sherlock welcomed the Minister's actions, saying she made the "right decision".
Clearly, lessons around proper governance have not been learned within the upper echelons of Scouting Ireland.
"Recent Board decisions left many in Leinster House perplexed," he said. "They have to accept that they can’t go back to business as usual.
"The Minister has to protect the taxpayer's interest here. We demand transparency and proper governance.”