The Irish embassy in Tehran has been identified for possible closure as part of ongoing attempts by the government to cut the cost of Ireland's diplomatic service, the Sunday Tribune understands.

Despite that the state currently funds two separate embassies in Rome – one to Italy and one to the Holy See – it is thought to be unlikely that either of these representations will be closed or amalgamated.

Foreign affairs minister Micheál Martin is due to meet with the Papal Nuncio Archbishop Giuseppe Leanza later this week to discuss the latter's failure to respond to the Commission of Investigation into the Dublin archdiocese.

Well-placed sources told the Sunday Tribune that instead of closing the state's Vatican embassy, the embassy in Tehran has been identified for possible closure.

"The joke about all this is that it looks like we are going to have to close at least one or two embassies. One of those being seriously looked at is Tehran, which is in a country that is a key player in the Middle East," one source said. "But they could sell the Holy See embassy and amalgamate it… it is probably worth a small fortune."

According to the department's website, the Irish mission to the Holy See, which is based at the opulent Villa Spada in Rome, was established in 1929, and is "one of the earliest missions established by the Irish government… although the special relationship between Ireland and the Holy See had been established centuries earlier."

But in a letter to The Irish Times yesterday, former Progressive Democrat leader and party founder, Des O'Malley, suggested that this would be a good time to consider having just one embassy in Rome. He revealed that he had previously suggested such a move but had been met with resistance.

"Some ministers at least felt this might be a good idea but the Department of Foreign Affairs was apparently outraged and described the suggestion as "unthinkable", he wrote. "Might this not be a good time to reconsider my proposal?"