The Finance Minister says indoor dining can only return on a step-by-step basis, in order to avoid restrictions being eased too quickly.
As part of the Government's reopening plan, indoor dining in pubs and restaurants will be considered at the end of June.
However, indoor dining will be allowed to resume in hotels and B&Bs from June 2nd - albeit only for overnight guests and residents.
The Restaurants Association of Ireland has expressed 'disbelief, confusion and frustration' that restaurants will be restricted to outdoor dining throughout June while hotel restaurants and bars can reopen.
Chief executive Adrian Cummins says the move has 'divided' the hospitality sector into two categories.
Speaking to Newstalk, Minister Paschal Donohoe said he understands how difficult the last year has been for the hospitality sector.
He said: "The reason we are opening our economy stage by stage is to give us every chance… that we don’t lose progress by going too far, too quickly.
“I believe with the plan that we have we will get to a point where we can open up indoor dining again, but we need to do it step-by-step.”
Working from home
The Taoiseach yesterday said people will be asked to work from home unless absolutely necessary "through to September".
Minister Donohoe said the Government understands the importance of office work, including for many businesses that depend on people travelling into towns and cities for work.
However, he said the Government needs to get the balance right between opening up the economy and safety.
He said: “We need to continue our efforts to suppress [the virus] - and that is why it will take some more time before we can open up offices to facilitate either people working from the office entirely, or to facilitate new hybrid ways of working.”
Minister Donohoe was speaking after announcing that the VAT relief in place for the domestic supply of PPE has been extended until the end of the year.
The 0% rate also applies to other items including hand sanitiser, thermometers, oxygen, medical ventilators.
The Finance Minister said the zero VAT rate should help the likes of employers who want to ensure they can provide hand sanitisers and other supplies to staff as the year goes on.