The State Claims Agency will make a decision which is "just and fair in all circumstances" in relation to costs in the Louise O'Keeffe abuse case, the Dáil was told.

Minister for Finance Brian Cowen said the State had "sympathy for the personal circumstances" of Ms O'Keeffe. The agency would discuss the issue and would take into account her personal circumstances "as it would in every other case and make a decision arising from that which is just and fair in all circumstances".

He was responding to Labour's education spokeswoman, Jan O'Sullivan. She said Taoiseach Bertie Ahern's comment that the State would deal sympathetically with Ms O'Keeffe's costs was "welcome as far as it goes but Ms O'Keeffe is still extremely worried that she could lose her house".

She asked Mr Cowen to be more specific and clarify the instructions being given to the State Claims Agency.

Mr Cowen said, however, that he could not be more specific than the agency official who gave media interviews during the week about the case, and explained the issue "clearly and in detail".

Ms O'Keeffe took a failed civil action against the Department of Education, arising from sexual abuse she suffered at a Co Cork national school. The High Court ruled that the department had no responsibility in the case, which resulted in legal costs of half-a-million euro.

"We have given authority to the State Claims Agency to defend the State's interest in regard to claims brought against the State. Obviously one has sympathy for the personal circumstances of the individual concerned in this matter," Mr Cowen said.