Homes in rural Ireland will have better internet access than Dublin and the regional cities as part of the €3bn plan to roll-out fibre broadband.

The ambitious plan involves taxpayers subsidising broadband at an average cost of €5,000 per house over 25 years.

The Government has promised to bring a fibre connection to every home and business, regardless of their location.

A new company, National Broadband Ireland (NBI), is to be established and it is expected the roll-out will begin before the end of the year.

NBI will effectively piggyback on the existing network of telephone poles, which are maintained by Eir, to bring cables around the country.

It will take seven years for the most remote properties to be reached.

Opposition parties have rounded on the Government for making the announcement just weeks out from the local elections.

And the Irish Independent has learned of an “explosive” memo prepared by the Department of Public Expenditure which warned ministers of an “unprecedented risk” to the Exchequer.

The intervention area covers 540,000 homes and businesses, affecting 1.1 million people.

A target of reaching 133,000 homes in the first two years has been set. Between 70,000 to 100,000 homes will then be added each year.

It means rural Ireland will be the best-connected region in Europe, while cities are dependent on existing copper wire infrastructure.

But Rural Affairs Minister Michael Ring argued people in the regions have “waited long enough”.

“There’s nobody out there, particularly in Dublin, who could be complaining about proper broadband in rural Ireland,” he said.

The plan is to provide fibre broadband to 98pc of all premises with speeds starting from 150mb/s, rising to 500mb/s over the next decade for residential users and much higher speeds available for business.

The remaining 2pc may have to be provided with an alternative wireless offering due to geographical or cost factors. Ministers are desperate to avoid accusations that they have allowed the project’s cost to spiral in a similar fashion to the National Children’s Hospital.

As a result the contract, which won’t be formally signed until later this year, includes a maximum pay-out of €2.97bn. This includes €545m for contingency fund in case specific issues arise.

Cabinet debated the project for more than four hours yesterday before unanimously giving Communications Minister Richard Bruton permission to proceed.

Among the documents provided to ministers was a six-page memo from the Department of Public Expenditure which strongly urged the plan to be scrapped. Sources told the Irish Independent there was surprise at the strength of the language used in the “explosive memo”.

It is understood to have warned of an “unprecedented risk” to the State’s finances. Officials named a number of individual projects, including roads upgrades and primary care centres, that may have to be delayed.

The memo also suggested that €3bn commitment would result in fewer social houses being built in the coming years. “It wasn’t just advising on the project, it was strongly against the idea and even mentioned a potential breach of the public spending code,” said a source.

However, Finance Minister Paschal Donohoe actively went against his senior officials to back the investment.

He assured colleagues that extra capital funding would be provided so that other projects are not affected.

Speaking afterwards, Mr Donohoe said his department has preformed its “challenge function very robustly”. The Department of Communication suggested the benefit to every home will be in the region of €12,000. Fianna Fáil and Sinn Féin questioned why the ESB wasn’t considered as an alternative.

Fianna Fáil’s communications spokesman Timmy Dooley said: “Fine Gael’s plan not only flies in the face of official advice… but it simply doesn’t make sense.”

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