The Tánaiste (Irish deputy prime minister) has told the Dáil he expects local county lockdowns to be imposed "in the coming months".
There is speculation that public health officials meeting on Thursday will recommend further restrictions on Dublin because of the spread of Covid.
Leo Varadkar said the virus had been growing at a considerable rate in recent days.
One further death and 240 new Covid-19 cases were confirmed on Thursday.
It brings the total number of coronavirus deaths to 1,789 in the country.
On Thursday night, Irish broadcaster RTÉ reported that the National Public Health Emergency Team (NPHET) has recommended that Dublin be moved to the level three risk rating of the country's Covid-19 plan.
This would see an even greater tightening of restrictions in the capital and surrounding county, including a bar on social or family gatherings of any size, house visits limited to one other household and a halt to all but top-level sporting activity.
It is also reported that the Irish cabinet is considering a request from NPHET that all indoor dining in Dublin's pubs and restaurants be stopped.
Mr Varadkar said the increased spread of the virus was "reflected in a relatively small but real increase in hospitalisations and ICU [intensive care unit] admissions".
But he added that Dublin's figures were much lower than those in Brussels, Amsterdam, Madrid, Paris and Prague.
"If we choose to act in relation to Dublin in the next couple of days, far from being slow to act as some would argue, we will be the first movers in Europe in taking action early", Mr Varadkar said.
Initially it was announced they would have to self-isolate and parliament would be adjourned indefinitely.
However, Mr Donnelly tested negative and the Dáil resumed business later in the day.
Sinn Féin president Mary Lou McDonald questioned the Irish government's response to the case.
"The idea that all of government would grind to a halt because one person, one individual minister had to be tested raises some serious questions as to how organised the government is," she said.
"If there isn't a sufficiently robust protocol then we are certainly going to have to revisit it."