A senior Garda (Irish police) officer told his staff the force had already “exhausted” its annual budget for 2017 as he cancelled overtime in Dublin.
The funding problem was confirmed in a letter from Assistant Commissioner Pat Leahy to Dublin chief superintendents.
He said all overtime in the city was cancelled, apart from two operations targeting a gang feud and port crime.
But a garda statement said officers can access their 2018 budget on 4 December 2017 and overtime can resume that day.
The clarification from the force follows public concern that a ban on garda overtime in the run up to Christmas would be “an open door for criminals”.
The Irish Department of Justice has also told BBC News NI that its minister will present a case to a parliamentary committee on Thursday, seeking an additional 50.5m euros (£45m) for this year’s garda budget.
Details of the temporary funding shortfall emerged on Tuesday when Mr Leahy sent a letter marked “urgent” to all chief superintendents in the Dublin Metropolitan Region (DMR).
The internal correspondence was leaked and a copy of the letter was shared on social media.
He wrote to advise them that “under no circumstances is overtime to be incurred in the DMR, the sole exception are members employed on Operation C-Port and Operation Hybrid”.
The port operation involves increased security at Dublin Port, while Operation Hybrid is the investigation into a murderous feud between the Hutch and Kinahan gangs, which has resulted in several fatal gun attacks.
Sinn Féin’s justice spokesman, Donnchadh Ó Laoghaire, said the situation was “worrying to say the least”.
“The fact that the budget has been exhausted before one of the busiest periods of the year points to under-resourcing, and this simply is not sustainable nor acceptable,” he said.
The Garda Representative Association (GRA) – the professional body which represents rank and file officers – said it was “astonished” by the shortfall and described it as “an open door for criminals”.
The GRA claimed it was not possible to police the Republic of Ireland without overtime.
In a statement, the police force said: “An Garda Síochána’s budget for 2018 starts on Monday, 4 December, 2017 and from that day overtime will then be available to regional, division and district officers for policing delivery within the overtime budget allocated to them.”
The Irish Department of Justice told BBC News NI it was “important to note” that overtime worked in December was due to be paid from the 2018 budget.
Justice Minister Charlie Flanagan is due to present a “supplementary estimate” before a Dáil (Irish Parliament) committee on Thursday, seeking additional 50.5m euros for the force.
“This will bring the overtime budget to over 130m euros (£115m) for 2017,” his department said.
“This compares with expenditure on overtime of some 91m euros in 2016, some 56m euros in 2015 and some 37.7m euros in 2014.”
The department said the force was going through an “unprecedented level of recruitment” which would see an additional 800 officers in post by the end of this year.
It said it expected the appointments would “alleviate the pressure on the overtime budget”.
The department added that 100m euros (£88m) had been allocated for garda overtime over the course of the next 12 months.
The funding problems cap a very difficult year for the Republic of Ireland’s policing and justice system.
The force has been rocked by a number of scandals, the most serious being a claim that when a whistleblower spoke out about corruption, senior officers tried to smear his reputation with false allegations of child sex abuse.
The ongoing investigation into the treatment of the whistleblower, Sgt Maurice McCabe, claimed its latest high-profile scalp on Tuesday, when Tánaiste (Irish deputy prime minister) Frances Fitzgerald resigned over her handling of the case.
Her resignation relieved the immediate pressure on the minority Fine Gael-led coalition government, which had faced the possibility of having to call a snap general election at a sensitive stage in the Brexit negotiations.