Chancellor George Osborne is preparing the ground for a British intervention to prop up Ireland's struggling economy.
EU finance ministers are meeting in Brussels today to discuss what many, including German chancellor Angela Merkel, fear could turn into another Greek-style sovereign debt crisis.
The 16 eurozone countries' representatives gathered yesterday fear that unless they step in to offer Ireland a bailout package the same "contagion" which crippled markets earlier this year could return.
"The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas," a statement last night said.
Now Mr Osborne has offered to provide British assistance to Ireland, even though the UK is not in the eurozone.
"We are going to do what's in Britain's national interest," he said.
"Ireland is our closest neighbour and it is in Britain's national interest that the Irish economy is successful and we have a stable banking system.
"So Britain stands ready to support Ireland in the steps that it needs to take to bring about that stability."
Offers of support will not necessarily be taken up as the Irish Republic government remains insistent it does not need help.
Irish finance minister Brian Lenihan appeared to step back from previous defiant positions, however, telling state broadcaster RTE: "There no question of loading onto the Irish sovereign and the Irish state some kind of unspecified burden.
"That's why the government took great care not to make a formal application at this stage but to engage in intensive discussions to see exactly what the options are ... and should be taken at this stage."
Britain has substantial financial links with Ireland, which is its largest trading partner within the EU. UK banks have substantial holdings in Ireland which would be badly hit by a crisis of the kind many European leaders now fear.
Some commentators argue that Irish decline could be in Britain's interests however. The country based much of its previous economic success on presenting itself to multinationals as a low-tax, English speaking gateway to Europe - a status Mr Osborne would very much like to usurp.