A majority of TDs have rejected a Social Democrats' motion seeking the expulsion of the Israeli ambassador with 85 deputies backing the Government and 55 voting against.
The Social Democrats' motion demanded that the diplomatic credentials of Israel's Ambassador to Ireland Dana Erlich be revoked.
The motion also called for Ireland to use its influence in Brussels to seek a suspension of the EU-Israel trade deal, invoking a human rights clause in the agreement, and suspend Israel from participation in the Horizon Europe research funding initiative.
A separate Sinn Féin motion urging the Government to refer Israel to the International Criminal Court over its actions in Gaza was also defeated by 77 votes to 58.
Sinn Féin's motion was supported by the Social Democrats, People Before Profit and the Labour Party.
Earlier, more than 1,000 people staged a protest outside Leinster House in Dublin calling for the Israeli ambassador to be expelled from the country.
Demonstrators waved large Palestinian flags as they also called for a ceasefire.
They shouted "Free Palestine", "Israeli ambassador, out, out, out", and "From the river to the sea, Palestine will be free".
The demonstrators also erected a large sign which spelled out "Gaza" in lights.
People Before Profit TD Richard Boyd Barrett was among the protesters. Sinn Féin TDs Pearse Doherty and Matt Carthy, as well as Social Democrats leader Holly Cairns and party TD Gary Gannon, were also in attendance.
Speaking during a Dáil debate earlier, Minister of State James Browne warned that Ireland would be pushed to the margins of international opinion if it expelled Israel's ambassador in Dublin.
Ms Cairns said that "the Irish people are repulsed" at the killings in Gaza and warned that "an impending genocide" demands action, not words.
She told the Dáil that the refusal of most Western leaders to shout stop and demand a ceasefire has led to thousands of deaths.
"Israel is killing with impunity. According to the World Health Organisation, Gaza is now a graveyard for children.
"I recognise that the Irish Government has done more than most of the EU to advocate for a ceasefire, but that's just evidence of how low the bar is.
"Words of condemnation are not enough. We need action.
"There must be consequences for the crimes perpetrated by Israel on a captive civilian population in Gaza."
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Tabling a counter motion that removed the calls for sanctions, Mr Browne told the Dáil that maintaining diplomatic links with Israel was vital.
He said: "There is a humanitarian catastrophe unfolding in Gaza and there is a real risk of regional spillover of conflict."
"At the same time, I regret that the motion proposed by the Social Democrats seeks to push Ireland to the margins of international opinion," he said, claiming such a move would undermine the country's influence in the Middle East.
"It underplays the value of international and multilateral engagement.
"Ireland must continue to work with our international partners in responding to this crisis.
"The Government has made its position clear regarding proposals to expel the Israeli ambassador, cutting off diplomatic relations with a country means cutting off communication channels."
Later responding to Mr Browne's warning of Ireland being pushed to the margins, Ms Cairns said: "Given the majority of Western leaders' opinion, I'm happy for Ireland to be an outlier."
Sinn Féin's Matt Carthy said he was "ashamed" at the international community's response to the Israeli bombardment of Gaza.
"I am ashamed of the international community's response to what we have seen in Gaza and particularly ashamed by the response of the EU," he said.
"I think EU leaders have ensured that the European Union no longer has any credibility to be a voice for peace, international law and for the basic rules of humanity for so long as they refuse to take a stand."
Minister of State Séan Fleming also addressed the Dáil during the two-hour debate today.
He said: "It is clear that deputies across the house are deeply and genuinely concerned at the horrific situation that has unfolded in Israel and in the occupied Palestinian Territory over the past three weeks.
"The Government shares this deep alarm at the situation and its continued rapid deterioration, including the grave humanitarian situation that now exists within the Gaza Strip."
He added: "The Irish Government's position on this is clear. Israel has the right to defend itself and its people from attack.
"But this is not an unfettered right. International humanitarian law applies, the principle of proportionality applies, and the Israeli military has a duty to ensure the protection of citizens. A humanitarian ceasefire for Gaza is an essential, basic step now."
