The Labour Party chairman Colm Keaveney has said disagreements over cuts of €130m to the health service could result in a severe split in government.
Mr Keaveney and party colleague Minister for Communications Pat Rabbitte have both said they are not confident the Government will survive beyond December's budget.
Deep divisions are said to be emerging between Labour and Fine Gael over Health Minister James Reilly's plans to press ahead with cuts to the health service between now and December, and over the minister's criticisms of the Croke Park Agreement.
Deputy Keaveney said the Labour Party was not ruling out the possibility of preparations for a snap election.
"I don't envisage a general election taking place with respect to this issue," he said. "However, I do believe this is the sort of issue that contributes to the destabilising of a good relationship in government."