A 100% compensation scheme for "most but not all" mica homeowners is now being considered by the Government.
Among the options being looked at to support people whose homes were built using the defective bricks, is a compensation package that would give homeowners a certain amount per square metre or square foot.
It is understood that this figure would be "evidence based" using average building costs per square metre.
Another possibility being examined would pay homeowners 100% compensation up to a certain threshold.
"We have to be realistic," a senior source said.
Another Government source suggested a cap of €500,000 may be placed on any redress payouts, meaning the majority of homeowners would receive 100% redress.
However, this figure is likely to have to include any ancillary costs such as rent paid by people for alternative accommodation when their homes are being rebuilt.
The mica issue has caused significant tension within Government as Fianna Fáil and Fine Gael TDs along the western seaboard fear they could be wiped out if a full redress scheme is not introduced.
Fine Gael representatives from Donegal held a meeting on Tuesday to discuss the issue, with one councillor telling the group: "If it's not 100% redress, we may forget about the local elections, let alone the general."
Another elected representative said: "If this doesn't get sorted, Joe [McHugh] and Charlie McConalogue may as well not show up at the doors the next time."
Donegal TDs including Agriculture Mr McConalogue, Pearse Doherty, and Mr McHugh attended a separate high-level meeting with the mica action group on Monday during which they were told that those affected would not settle for less than 100% redress.
"Charlie [McConalogue] will be a key contributor, either for delivery of 100% or disappointment if it doesn’t materialise," one Donegal representative present at the meeting said.
"Joe McHugh and Minister McConalogue have been told in no uncertain terms that the last time the people were sold a pup and they wouldn't stand for it again."
Speaking in New York, Taoiseach Michéal Martin said full redress for those affected by the defective building blocks remains possible.
He said the mica representative body will meet Housing Minister Darragh O'Brien and officials on today.
"The target is that we will bring these talks to a close by the end of the month and a proposal to the Cabinet in early October," Mr Martin said.
This was echoed by the Tánaiste, Leo Varadkar who told a meeting of his parliamentary party that a 100% redress scheme remains on the table.
Mr Varadkar will meet Mr McHugh, Clare TD Joe Carey, and Mayo TD Alan Dillon again tomorrow after all three pushed for full compensation at the meeting.