The Barry Cowen controversy had become a "very serious distraction" for the Government, according to the Public Expenditure Minister.
Michael McGrath says "this saga rumbling on was just incompatible with Government functioning with a degree of normality".
Taoiseach Michael Martin sacked Deputy Cowen as Agriculture Minister last night after the Laois-Offaly TD refused to provide further public statements on his 2016 drink driving offence.
Deputy Cowen has strongly denied allegations that he attempted to evade gardaí during the incident.
However, Mr Martin said there were "legitimate doubts and additional questions" raised, and that it was "untenable" that Deputy Cowen was refusing to answer further questions in the Dáil.
Deputy Cowen has suggested his removal from office "has undermined and potentially prejudiced my entitlement to fair process".
(1) The Taoiseach informed me this evening by phone that he was removing me from office as Minister for Agriculture.
I am both surprised and disappointed with this decision.
— Barry Cowen (@CowenBarry) July 14, 2020
A replacement minister is set to be announced later today.
Speaking on Newstalk Breakfast this morning, Michael McGrath said he has a "huge amount of sympathy" for Barry Cowen and his family.
He said: "Personally, I know the elation of being appointed a minister less than three weeks ago. I can only imagine what he is going through in having to deal with the fallout from all of this.
"The issue that brought things to a head yesterday essentially lies in the fact that the Taoiseach was of the view that a further statement from Barry Cowen in the Dáil was necessary... Barry decided he did not wish to do this.
"Ultimately, the Taoiseach had to make an incredibly difficult decision. I think it is undeniable that the issue had become a very serious distraction for the Government."
Minister McGrath stressed that the Taoiseach's decision was "absolutely without prejudice" and "not in any way passing judgement on the substance" of the recent allegation.
However, he said Mr Martin ultimately had to make a decision that "no Taoiseach wishes to make".
He said: "I spoke with the Taoiseach last night, and I think he was very keen to afford Barry every opportunity to make the decision to come before the House... I think the Taoiseach was genuinely hoping that Barry would make that decision. Barry decided against that and stuck to his position."
Minister McGrath says it's his understanding that the issue was discussed on the 3rd or 4th of July, when the first media queries came into the Department of the Taoiseach about the Garda records.
He acknowledged that the controversy should "never have happened" and that it represents a tough start for the Government.
He said: "This issue has been dealt with. It's been a very tough issue for all concerned, not least Barry and his family.
"We will pick up the pieces and move on from this."