The money had been earmarked to relocate the National Maternity Hospital
The acting Health Minister Leo Varadkar has warned St Vincent's Hospital in Dublin that it may lose €150m in funding.
The money had been earmarked to relocate the National Maternity Hospital to its campus, given the poor state of the infrastructure at Holles Street.
It is understood the National Maternity Hospital wants to maintain an independent management structure, even if they are relocated to the St Vincent's site.
Mr Varadkar has warned if the row is not resolved the money will be directed elsewhere.
In a letter to St Vincent's chairman Jimmy Menton - seen by the Irish Times - Mr Varadkar expressed support for the National Maternity Hospital stance.
He also pointed out that the recently published national maternity strategy proposes retaining the mastership system for the hospital.
"If no such agreement can be reached within the next few weeks, I regret that we will be left with no option but to examine alternatives", Mr Varadkar said.
The Irish Times' Health Correspondent Paul Cullen has been covering the story, and spoke to Pat Kenny about the current situation.
He explained that "Holles Street still has difficulties about going into the Vincent's campus and playing second fiddle, because it wouldn't have its own board anymore - it would have two seats on the Vincent's board.
"It's much smaller than the adult hospital - Vincent's is about eight to ten times bigger than Holles Street. Therefore Holles Street thinks it would lose its identity and lines of management," he added.
He also mentioned that a second aspect of the row "relates to issues of ethos, where a maternity hospital is going to exist on the campus of St Vincent's Hospital - which is owned by a religious order and has a Catholic ethos.