Catherine Connolly has been elected Leas Ceann Comhairle.
Ms Connolly beat the agreed government candidate, Fine Gael's Fergus O'Dowd, in a further embarrassment to the Fianna Fáil, Fine Gael and Green Party coalition.
It's understood the government had 84 available votes, with Mr O'Dowd only garnering 74. Sources say "a post mortem" was underway in the aftermath of the result, as the vote is held in a secret ballot, it is not yet known who defected from the government.
One source said that the suspicion is mostly within Fianna Fáil, who last night agreed in a parliamentary party meeting to back Mr O'Dowd "through gritted teeth" but there is potential some Fine Gael colleagues also voted against the government.
There is also the potential that government TDs didn't show up in adequate numbers to swing the vote.
The Dáil register was checked immediately after the shock upset for the government, according to sources present.
"As it happened someone from Fine Gael just said: 'What the fuck?' out loud," a source added.
"Everyone's in the same boat, total shock, we expected Catherine to get a good vote as everyone likes her, but it turns out she had the lion's share."
"There are nine independents supporting the government, some must've voted for Fergus, which means up to around 15 government TDs could've voted for Catherine.
"It's extraordinary, this government is a shambles."
The shock upset comes as the government had to further concede on the makeup of Oireachtas committees on Thursday morning.
"Between the committees and now this, it's one thing after another," a source added.
Ms Connolly, the former mayor of Galway, has often taken on the role as temporary chair of the Dáil when requested by the Ceann Comhairle, and has served as chair of the committee on the Irish language, the Gaeltacht and the islands.
Ms Connolly received unanimous support from the Independent group to put her name forward and was backed by the largest opposition party, Sinn Féin.
This is the first time a woman has ever been elected as either Ceann Comhairle or Leas Ceann Comhairle in the 101 years of Dáil Éireann.
The plum position won by Ms Connolly has a salary of €96,189 with an added €38,787 salaried allowance.