The DAA has confirmed that high-level meetings regarding a third terminal took place between it and Ryanair last August.

However, it said that it strongly refuted O'Leary's allegation.

O'Leary claimed to the Sunday Tribune that, during these meetings, the DAA proposed to set up a working group examining the possibility of building a third terminal on the condition that Ryanair didn't lodge a planning objection against its Terminal 2 plans.

He said that the airline immediately rejected the proposal.

"It is a bit like getting involved in a hospital study group. You'd be sitting there studying it for the next 25 years with the DAA while they build a second terminal that costs four times what it should and doubles passenger charges."

The airline subsequently lodged an objection with Fingal County Council, which granted permission for the new terminal last October. Ryanair, An Taisce and local residents later appealed that decision to An Bord Pleanala. An oral hearing into the terminal is currently ongoing.

The airline has argued that the terminal is too expensive, is the wrong design and is in the wrong place. Last week, it threatened to freeze its expansion at the airport if it is approved.

A spokesman for the DAA claimed, however, that Ryanair raised the issue of a third terminal during the talks. He said that it was one of the preconditions that the airline had placed on its support for Terminal 2.

"The DAA agreed to support Ryanair on these issues but stressed that there were many planning and logistical barriers to the construction of a third terminal on the existing airport campus that would, at a minimum, delay its delivery until after 2011, " the spokesman claimed.

He also claimed that the DAA's discussions with the airline were part of an extensive consultation process which it carried out prior to lodging its planning application for Terminal 2.

He claimed that its talks with Ryanair came to an end when the airline "unilaterally terminated these discussions soon after the submission by the DAA of its planning application last August".