The Government has indicated that the top rate of tax (52%) is to be reduced from October's Budget onwards, with the saving aimed at benefiting low- and middle-income earners.

The coalition is also pledging to return Ireland to a level of full employment by 2020 - replacing all the jobs lost during the crisis.

Fine Gael and Labour's new 'Statement of Government Priorities' also commits to the full retention of the Free Travel Scheme.

Taoiseach Enda Kenny said the reduction of the top rate of tax - which is unsustainable - will be achieved over a number of Budgets.

"What we want to do is to announce a tax reform plan in the forthcoming Budget that will extend over a number of years," Mr Kenny said.

"It is about shifting the burden of tax away from low- and middle-income families, about supporting work, about the value of entrepreneurship, and ensuring that work always pays."

The Taoiseach earlier outlined a series of dramatic changes to the top ministerial ranks for the final 18 months of the partnership with the big winners including Leo Varadkar as the new Health Minister.

The raft of changes in the top ranks of Fine Gael and Labour took place after tough talking between Mr Kenny and the new Labour leader, Tánaiste and Social Protection Minister Joan Burton over the last week.

The Government is also planning to establish a Low Pay Commission - to make recommendations about the minimum wage.

Access to subsidised childcare and afterschool places is to be increased - by extending eligibility.

The new Tánaiste Ms Burton says there will also be a €100 increase in the Household Benefits Package in Budget 2015.

"People who are on the household benefits package will receive a quarterly payment of €25 towards the cost of water services," she said.

"That will extend to roughly €400,000 households."

In one of the most high profile promotions of today's reshuffle Mr Varadkar, a qualified doctor, moves from transport, tourism and sport, to succeed Dr James Reilly in the Department of Health.

The former health minister, a close ally of the Taoiseach, moves to a new role in the junior ranks but combining the important divisions of children and public health.

Charlie Flanagan, also a Kenny ally, has been promoted to Minister for Foreign Affairs.

Simon Coveney, widely seen as a rising star in the Fine Gael ranks alongside Mr Varadkar, has been given the new responsibility of defence alongside his role as Agriculture Minister.

Jan O’Sullivan, formerly a junior minister, moves to head the Department of Education while the party’s recently-appointed deputy leader Alan Kelly is also promoted, taking up the role of Environment Minister.

Mr Kelly replaces Fine Gael’s Phil Hogan, who stands down and is being put forward for a European Commissioner role.

The reshuffle sees the Labour old guard weeded out of cabinet.

Ruairi Quinn had already confirmed his departure from the ministerial ranks on the back of Eamon Gilmore’s resignation as party leader and Tanaiste over the party’s decimation at the polls.

Veteran former leader Pat Rabbitte has been demoted from his role at the helm of the Department of Communications, Energy and Natural Resources to the backbenches.

Alex White, who put up an ultimately weak challenge to Ms Burton for the Labour leadership, takes that role.

A new “super junior” ministerial position has also been created with Ged Nash, a Labour TD from Louth, entering the ministerial ranks.

Other key changes include Paschal Donohoe’s promotion as Minister for Transport and newcomer to the Dail in the 2011 election, TD for Cavan-Monaghan, Heather Humphreys rising quickly through the ranks to head up the Department of Arts, Heritage and Gaeltacht.

Her predecessor Jimmy Deenihan is demoted but given a new junior role spanning the Department of the Taoiseach and Foreign Affairs with responsibility for issues related to the Irish diaspora.

Ms Humphreys is the fourth woman at the cabinet table.

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