DUBLIN - IRELAND can legally hold a second referendum on the European Union's Lisbon Treaty, an Irish parliamentary committee report said on Thursday in a key finding immediately welcomed by the government.

The sub-committee was set up after Irish voters said 'No' in a June referendum on the treaty of reforms aimed at streamlining the bloc's decision-making but which must be ratified by all 27 member states before it can take effect.

Treaty backers say the Irish rejection paralysed the bloc at a time when it needs rapid reform after taking in new members from the former communist east. They want Ireland to come up with a solution to the impasse by a Dec 11-12 summit.

'No legal obstacle appears to exist to having a referendum either on precisely the same issue as that dealt with on June 12 or some variation thereof,' the cross-party sub-committee on Ireland's future in the EU said in the report.

'If a decision was made to hold another referendum, it would be expected that the government would respond to concerns expressed during the referendum campaign,' it said of Irish voter worries over the treaty's impact on issues as wide-ranging as defence and abortion policy.

Foreign Minister Micheal Martin welcomed the findings.

'The report confirms that Ireland's place is at the heart of the European Union,' he said in a statement.

'Their work will be of great assistance to the government as we look for ways of meeting the concerns expressed by the Irish people last June.'

Irish Prime Minister Brian Cowen has promised his EU peers proposals on how Dublin plans to proceed with ratification, but until now has not ruled in or ruled out a second plebiscite.

'It is a good analysis of the situation and outlines the options for the government,' said Mr Joe Hennon, spokesman for EU Commission Vice-President Margot Wallstrom.

The report ruled out other options to a referendum, such as ratification of parts of the treaty via parliament or an attempt to renegotiate it. It said a referendum on Ireland's continued EU membership was 'unthinkable'.

Mr Cowen has said Brussels' handling of the worst global economic crisis in 80 years and Irish membership of the euro zone group of 15 countries using the euro currency had shielded his country from a devastating downturn.

'Exclusion of Ireland from the European mainstream could effect the ability of Irish banks to raise funds on the international money market,' warned the report.

It added that rejection of the treaty could hinder foreign direct investment upon which Ireland's open economy has thrived.

The Lisbon treaty replaced the EU constitution rejected by French and Dutch voters in 2005 and is the culmination of eight years of diplomatic wrangling.

Sweden ratified the treaty last week, leaving just Germany, Poland, the Czech Republic and Ireland bringing up the rear. -- REUTERS