The central bank proposed the tough new limits in October before coming up against strong opposition from banks and the government, who said the measures could push up rents, frustrate potential homebuyers and have "unintended social consequences".

The central bank kept a proposal that mortgages be subject to an 80 percent loan-to-value (LTV) limit but said it would only apply to those buying for the second time, while first time buyers could now borrow 90 percent of the value of a home if it cost 220,000 euros or less.

For first-time buyers who exceed the threshold, the 90 percent limit will apply on the first 220,000 euros with an 80 percent limit applicable on any excess value, the central bank said in a statement.

"Although designed to be stable, the requirements are flexible enough to be adjusted in the future should the need arise," Central Bank Governor Patrick Honohan said.

Ireland's banks, slowly recovering from a near sector-wide collapse, can breach the limit for 15 percent of the aggregate value of annual housing loans, as was laid out in the proposals. A less contested limit on lending in excess of 3.5 times a borrower's gross income was also retained.

The central bank said it expected the regulations will be introduced under legislation in the coming weeks. In a brief statement, Finance Minister Michael Noonan said the rules would provide certainty to borrowers and ensure prudent lending.

His call for the restrictions to be phased in over a period of time was ignored. The International Monetary Fund warned on Tuesday that a phase-in period would see potential homebuyers rushing to beat the cap, pushing up prices faster.

The average asking price for a house in Ireland is 193,000 euros, according to property website Daft.ie, up 13 percent on a year ago but still almost half the 378,000 euro average paid at the peak of Ireland's ill-fated property boom in 2007.

However Daft says a three bedroom house in Dublin, where prices are rebounding sharply, costs between 230,000 euros and 469,000 euros, meaning first-time buyers in the capital could have to save a deposit of up to 72,000 euro for a family home.

A senior official in Noonan's department said last week that having to come up with large deposits was not "socially acceptable" and could cut the property market off from buyers lacking wealthy parents.

(Editing by Mark Heinrich)

By Padraic Halpin