It paves the way for a restructuring of Ireland’s most controversial bank bailout, reports The BBC.
The law was rushed through amid a rowdy late night and early morning sitting.
Under the plan the bank, now the IBRC, will cease to exist. Its debt will be transformed into a long-term bond.
The debt had been costing Irish taxpayers 3.1bn euros each year.
The legislation went through parliament after details of negotiations between the Irish government and the European Central Bank (ECB) were leaked on Wednesday.
In a sitting running into the early hours of Thursday, politicians in the lower house of the Irish parliament voted through the legislation by 113 to 36.
The scheme is designed to ensure the repayments are reduced and spread over a longer period but it requires approval from the ECB.
That may come on Thursday.
Liquidation may enable Dublin to delay by several years the repayment of debts it took on to rescue Anglo Irish.
The vote came after a stormy session in which the plans were attacked for their swift timeframe and lack of detail.
The leader of the Socialist Party, Joe Higgins, said the introduction had been “chaotic”.
The Republic of Ireland’s central bank governor, Patrick Honohan, had been negotiating the plan with the European Central Bank (ECB) late on Wednesday.
Members of the ECB’s board are currently in Frankfurt, where they have gathered for a regular monthly monetary policy meeting.
An official statement from the ECB is expected early on Thursday afternoon ahead of the regular press conference held by its president, Mario Draghi, to discuss the central bank’s interest rate decision.
The Irish government said that it was optimistic it would be able to come to an agreement with European officials
Irish Prime Minister Enda Kenny said the disappearance of Anglo Irish Bank and the Irish Nationwide Building Society, which is also held by IBRC, from the Irish financial landscape was “long overdue” and that without banking costs, Ireland’s debt levels would now be below Germany’s.
