The government's three "super-junior" ministers will "waive and gift back" their €16,000 pay rise.
The announcement was made on Tuesday after a week of sustained criticism from opposition politicians and the public.
A statement read: "The three Junior Ministers who sit at Cabinet, Jack Chambers, Hildegarde Naughton and Pippa Hackett have decided to waive and gift back to the state the increased allocation.
"This is in addition to the 10% pay cut for all Ministers, which was collectively agreed at Cabinet yesterday."
Instead, the three ministers of state will share €32,000 worth of allowances between them - rather than getting a €16,000 allowance each.
The salary bump and extra allowances were awarded after a vote in the Dáil last week. The government said that the increase was necessary, due to a need to have pay equity among ministers.
The waving of the increase will mean that instead of the three ministers receiving €15,829, they will each receive around €10,500.
Ministers Chambers and Naughton's salaries are now estimated at around €132,000, while Minister Hackett's salary will roughly be around €106,700.
The agreed 10% pay cut was due to apply to their increased salaries but will now apply to their previous wage.
Despite the cabinet gifting 10% of their salary back to the State, the coalition ministers will still take home more pay than the previous government.
The U-turn presents another embarrassing climbdown for the government which has been widely criticised for misreading the mood of the public in recent weeks.
The 10% cut was seen as "damage control" in order to gain back some ground with an angry public. However, the government claimed the decision had been made weeks before but it had not got around to announcing the move.
The Taoiseach admitted the issue around the pay increases "could have been handled better collectively by the Government, I would acknowledge that," amid ongoing reports of government TDs outraged by the move.
Sinn Féin's finance spokesman Pearse Doherty noted at the time that Fianna Fáil had opposed such an increase in pay for ministers while it was in opposition.
"€16,000 is a huge amount of money and it sends out all the wrong signals," he said.
"How in the name of God is it appropriate at this time to actually increase the salary of a junior minister who is already on more than €100,000?"