Emergency legislation to liquidate the former Anglo Irish Bank has passed through both houses of the Irish parliament.
It paves the way for a restructuring of Ireland's most controversial bank bailout.
Under the plan the bank, now the IBRC, will cease to exist. Its debt will be transformed into a long-term bond.
The scheme is designed to ensure the repayments are reduced and spread over a longer period.
However, it requires approval from the European Central Bank (ECB). That may come on Thursday.
The debt had been costing Irish taxpayers 3.1bn euros each year.
The legislation went through parliament after details of negotiations between the Irish government and the ECB were leaked on Wednesday.
In a sitting running into the early hours of Thursday, politicians in the lower house of the Irish parliament voted through the legislation by 113 to 36.
Liquidation may enable Dublin to delay by several years the repayment of debts it took on to rescue Anglo Irish.
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Although the Republic has been the most compliant, and in some ways, successful of the eurozone bailout countries, this expensive issue was threatening the stability of the Fine Gael/Labour coalition government and ultimately the country's adherence to its eurozone bailout terms.
The legislation to liquidate the bank provides a path to restructuring that debt, reducing the annual payments and spreading the pain over a longer term.
However, it requires approval from the European Central Bank which did not emerge, as hoped, last night but which may come later on Thursday.
Analysis: Jim Fitzpatrick, BBC NI business editor
Anglo was Ireland's baddest bank, its debts alone costing taxpayers over 3bn euros a year in repayments - around 2% of the country's economic output - for the next decade.Although the Republic has been the most compliant, and in some ways, successful of the eurozone bailout countries, this expensive issue was threatening the stability of the Fine Gael/Labour coalition government and ultimately the country's adherence to its eurozone bailout terms.
The legislation to liquidate the bank provides a path to restructuring that debt, reducing the annual payments and spreading the pain over a longer term.
However, it requires approval from the European Central Bank which did not emerge, as hoped, last night but which may come later on Thursday.
The vote came after a stormy session in which the plans were attacked for their swift timeframe and lack of detail.
The leader of the Socialist Party, Joe Higgins, said the introduction had been "chaotic".
The Republic of Ireland's central bank governor, Patrick Honohan, had been negotiating the plan with the European Central Bank (ECB) late on Wednesday.
Members of the ECB's board are currently in Frankfurt, where they have gathered for a regular monthly monetary policy meeting.
An official statement from the ECB is expected early on Thursday afternoon ahead of the regular press conference held by its president, Mario Draghi, to discuss the central bank's interest rate decision.
The Irish government said that it was optimistic it would be able to come to an agreement with European officials
Irish Prime Minister Enda Kenny said the disappearance of Anglo Irish Bank and the Irish Nationwide Building Society, which is also held by IBRC, from the Irish financial landscape was "long overdue" and that without banking costs, Ireland's debt levels would now be below Germany's.
Toxic loan book
IBRC's board was dismissed on Wednesday and the accountants KPMG are now running the bank.
If the Irish Republic gets ECB approval for the liquidation, IBRC's loans would be transferred to the National Asset Management Agency (Nama), the Irish "bad bank" responsible for recovering the value of problematic loans made by other Irish banks.
A so-called promissory note, under which Dublin must pay 3.1bn euros (£2.7bn; $4.2bn) a year until 2023, would be turned into sovereign bonds that may not have to be fully repaid for up to 40 years.
The result would be that Dublin postpones repayment of a huge debt burden. The government had previously wanted to reschedule the debt repayment, but this was blocked by the ECB after 18 months of negotiations.
The ECB was reluctant to be seen to be providing debt relief to a national government.
The IBRC has been winding down the old toxic loan book of Anglo Irish for more than two years.
The Irish government issued the total 31bn-euro promissory note in order to cover most of the 34bn-euro cost of rescuing Anglo Irish.
The bank, which still employs almost 800 people, was among the most prolific of lenders to property speculators and developers during the Irish Republic's housing bubble in the last decade.
Liquidation would mean all these would lose their jobs, although the government said the majority of these are expected to be rehired by Nama.
