The Irish government all but buckled to pressure to accept a historic international bailout Thursday

Ireland's central-bank governor and finance minister acknowledged for the first time Thursday that the country needs help rescuing its banking industry, which has been crippled by losses on sour loans.

The Irish government is in talks with the International Monetary Fund and European officials about a loan package that is likely to amount to 'tens of billions' of euros, the central-bank governor, Patrick Honohan, said. 'It will be a large loan because the purpose . . . is to show Ireland has sufficient firepower to deal with any concerns of the market.'

Ireland's grudging decision to accept foreign aid, after insisting it didn't need help, is a bitter moment for a country that won its independence from Britain decades ago. Already, some lawmakers and editorial writers are bemoaning what they see as the inevitable loss of sovereignty that will accompany a foreign bailout.

It is an equally pivotal point for the 16 nations that use Europe's common currency. After rescuing Greece in the spring, European leaders are now betting that if they extinguish the financial crisis engulfing Ireland, it won't spread to other euro-zone weak spots. But with bond markets continuing to punish those countries, new bailouts may be needed soon -- a prospect that some believe will call into question the durability of the euro as a common currency.

In Ireland, fears that the government won't be able to rescue its troubled banks have obliterated market confidence in the country's financial viability.

It has become almost impossible for Ireland's banks or government to drum up funding through traditional market sources. That has prompted them to lean heavily for financing on the European Central Bank, which has grown wary of its growing exposure to Ireland.

The Irish capitulation underscores the hazards of placing separate countries under a single monetary regime.

The ECB's low-interest policy exacerbated Ireland's bubble during the boom decade. Today, the central bank's anti-inflation bent accelerated Ireland's demise: According to several people familiar with the matter, it was the ECB -- nervous to be lending so heavily to troubled Irish banks -- that led the charge to push Ireland to find liquidity elsewhere.

The 750 billion euros bailout fund from which Ireland likely will draw was established just this spring, and European officials hoped never to use it. It was meant to reassure financial markets that they need not fear lending to a euro-zone country, because its fellows stood behind it.

This week, a team of officials from the IMF, the ECB and the European Commission arrived in Dublin to assess the scale of the problem and gauge how much assistance Ireland is likely to require.

Until Thursday, Irish government officials had rejected any suggestion that a bailout was necessary. But that position is wilting as leaders gently prepare the public for the idea of a politically unpopular bailout.