The Tánaiste has said the mica redress scheme has "gone on too long" and that a "better scheme is needed".
Leo Varadkar was asked about the defective blocks during leaders' questions in the Dáil on Thursday, but stopped short of backing campaigners' key demand for 100% redress.
Defective building blocks containing mica have caused cracks and fissures to open in an estimated 5,000 to 6,000 homes, primarily in Mayo and Donegal. Housing Minister Darragh O’Brien has promised answers for mica campaigners by the end of September from a working group considering a compensation scheme.
However, Sinn Féin's Pearse Doherty said Mr Vardkar and the Government could alleviate worries and mental health concerns of those affected by committing to 100% redress. He said the scheme for mica has to have parity with a similar scheme for pyrite in Dublin and North Leinster.
Mr Varadkar said while the scheme which had been proposed was never envisaged to fully rebuilding homes to "2021 standards" he accepts that a "much enhanced" scheme is needed.
Mr Doherty said that in one case, a female constituent of his had had her family home bulldozed due to the damage.
"The existing defective block redress scheme is not fit for purpose, that's clear. The remaining costs in some cases are higher than €100,000, the equivalent of a second mortgage for many, many families and affected homeowners. Their families and their children in Donegal and Mayo deserve equality with the scheme that was rolled out prior to this for homes affected by pyrite in Dublin."
Mr Varadkar said the current scheme was designed to give flexibility, but a new scheme was needed.
The decision to go with the grand scheme, as opposed to the type of scheme provided under the pyrite remediation board was done with the intention of giving homeowners the flexibility to manage their own projects, and allow them to deal directly with their appointed contractor, he said.
"It was not the intention of the scheme that it would fully cover the cost of a new build home to 2021 building standards with all of these components funded by the taxpayer," he said.
"These schemes generally seek a recipient contribution, so as to control costs, incentivise the use of appropriate remediation options and promote reuse of materials where that's feasible, But we do accept that we need a significantly enhanced scheme that is being developed at the moment."
Later in the session, Social Democrats co-leader Catherine Murphy raised concerns about Housing Minister Darragh O'Brien's assurance in the Dáil that the Shared Equity Scheme had been passed by the Central Bank in June.
Ms Murphy said, however, that "no such approval" has been given. Mr Varadkar said that "all of us make mistakes" and that Mr O'Brien had clarified his remarks and would answer questions in the Dáil in the coming week. Ms Murphy said that this was "not some mistake" and said the record of the Dáil should be corrected.