TAOISEACH Brian Cowen is prepared to postpone his trade mission trip to China to ensure negotiations with doctors in relation to the medical card for the over 70s are moving towards a constructive outcome.

By last night the Irish Medical Organisation and the government were engaging in talks about substantive issues related to the huge amount paid to general practitioners in the scheme.

"We are making contact with the IMO. We are in an evolving situation," Cowen told the Sunday Tribune in the aftermath of the crisis that threatened to overwhelm the coalition on Friday.

"I do intend on fulfilling my obligations, I have to meet the prime minister of China. It's important that we support Irish business, but I want to make sure that I have this process in place, up and running and moving ahead," he said at a function in Rashina, Co Offaly yesterday. "As soon as I put the process in place I can make arrangements to join colleagues either immediately or immediately thereafter. I will be going so I will just have to work out the logistics."

It is understood that after informal contacts between the government and the IMO on Friday – which prompted the Taoiseach's offer of a compromise on that night's RTÉ news – formal contacts were made between the government and the IMO yesterday afternoon.

Brian Cowen has laid out clear instructions of the parameters for a deal for the government and stressed the importance of working out a solution with respect to the budgetary realities.

One option potentially on the table is that the current system of two payments to GPs for medical cards – €161 a year for those who had been means-tested and awarded a card prior to turning 70 and €640 for those awarded a card simply because they had reached 70 – will be scrapped and replaced with one standard payment.

The amount would obviously be higher than the current €161 for means-tested medical-card holders but considerably less than the €640 on offer for so-called "gold cards".

Such a move would be popular among many doctors who believe the huge difference between the two payments is unfair, particularly for GPs working in disadvantaged areas.

However, many Fianna Fáil backbench TDs remain hugely unhappy at the Taoiseach's absolute insistence that the principle of automatic entitlement of all people over 70 to a medical card was finished.

Independent coalition TD Finian McGrath last night threatened to withdraw from government unless free medical cards were offered to all over 70.

Speaking after five hours in his constituency clinic, he said: "This has to be scrapped. If they don't do that I won't be hanging around. I will have no option but to withdraw from government."

And the mettle of Fianna Fáil TDs will be tested by a Fine Gael motion in the Dáil on Tuesday and Wednesday that will directly call for a reversal of the policy.

The Taoiseach and other senior ministers are determined to go head-to-head with the opposition on the issue of automatic entitlement. They believe the cost of this automatic entitlement is simply unsustainable and directly takes medical cards from those less well-off under the age of 70.

But many FF TDs, spook­ed by the "battering" from the public at their constituency offices, still want the proposal to be parked and the backbench revolt may not yet have run its course.

Donegal South West TD Pat 'the Cope' Gallagher said yesterday: "I don't believe that Brian Cowen's statement has allayed the fears of anybody in my constituency. I am worried for those elderly who are anxious as a result of Tuesday's decision. Until they receive confirmation that their medical card is safe they are going to remain worried. I believe nothing short of a reversal will allay their fears."

Outspoken Cork North Central TD Noel O'Flynn, who claims to have had more than 500 calls from concerned pensioners to his constituency office in recent days, said, "Fianna Fáil have lost credibility. We can regain the confidence of the public by parking this issue and evaluating it again in a calm and collective manner."

However, with this unlikely to happen, close observers believe that backbench support will depend on the type of compromise that can be agreed with the IMO.

"If the thresholds for getting a medical card are generous, the government will get through this," one said.

But there is real anger among government deputies at how the issue has been handled, with Cowen, Brian Lenihan, Mary Harney and Tánaiste Mary Coughlan all coming in for criticism.

Coughlan's comments to Thursday's parliamentary meeting went down badly with deputies, while there is a belief that Cowen's authority has been damaged by the events of the past few days.

"They were sleepwalking. They didn't see this coming down the track," one well-placed source said.

Speculation in political circles about an intense row involving Brian Lenihan and rumours that he threatened to resign were utterly refuted by government figures last night.