However, the relatively simple six-digit system suggested by Communications Minister Eamon Ryan would not harness the full potential of the project, it said.
Officials made their comments as part of an internal consultation process on plans to roll-out a national postcode system in 2011.
Their submission said codes would be a valuable resource for mapping patterns in cancer cases and to help check for possible clusters and causes of the disease. Support and treatment would also be able to co-ordinate their efforts better.
“The greatest benefit in the context of health, is the ability postcodes would provide to enable the integration of health, education, housing, social care and employment data on a location basis.
“This is vital to understanding the complex factors surrounding health inequalities and social deprivation, and would provide vital intelligence regarding local community need,” said the Department of Health’s submission.
The Department of Health also called for a more elaborate and modern “geo- referencing system”.
However, a consultant’s report for Mr Ryan by PA Consulting Group opted to recommend a more simple six-digit code. It said this gave consideration to data protection laws and the need to have codes the public could adapt to easily.
The consultants estimated postcodes would save Government-backed service providers €22 million within 15 years.
The scheme would cost €14.3m to implement up front with An Post hit for once-off bill of €27.4m.
When costs and savings were balanced out across all sectors it said the economy as a whole would benefit by €5m before 2026.
Private delivery firms would gain about €7m.
Mr Ryan said it was an investment worth making.
However, Liz McManus of the Labour Party said: “I question why the minister is spending so much money on a scheme that has limited benefits? Is he doing it to keep up the appearance of being busy?” she said.
The Department of Social and Family Affairs said it would allow for more analysis of unemployment and welfare blackspots.
Codes would offer more effective information on house price trends and construction patterns, said the Department of the Environment.
The Revenue Commissioners estimated it would provide ongoing savings of €3.6m.
Agriculture House was the only branch of Government not to offer an enthusiastic endorsement.