Ireland provided the euro zone with a rare piece of good news on Tuesday when the government announced its debt was over 2 percent less than previously thought due to an accounting error, saving 3.6 billion euros (2.6 billion pounds).

The figures indicate that the ratio of general government debt to gross domestic product (GDP) -- the key indicator of the sustainability of Ireland's debt -- was 92.6 percent at the end of last year compared to the 94.9 percent reported.

The government will announce at the end of the week whether it will cut its 2011 debt to GDP forecast from the current 111 percent of GDP.

Before a property crash forced Dublin to bail out its banks, Ireland's debt to GDP ratio was around 25 percent.

The savings of 3.6 billion euros are equal to the minimum fiscal adjustment required for 2012 under its IMF/EU bailout.

Ireland's general government debt at the end of 2010 has been adjusted down to 144.4 billion euro from 148 billion euros, the central statistics bureau said.

Clearly the impact is quite significant and very positive in terms of the debt to GDP dynamic, Dublin based Glas Securities said in a note.

The mistake was the result of a change in how loans from the National Treasury Management Agency (NTMA) to the Housing Finance Agency (HFA) were accounted for.

The liabilities of the HFA are included in general government debt; the corresponding assets of the NTMA have been included in the 'liquid assets' of the NTMA, which are also part general government debt - effectively a double count, the finance department said in a statement.

Before the error was uncovered, the International Monetary Fund said that Ireland's general debt would peak at around 119 percent of GDP in 2013. The median forecast of a poll of 10 economists by Reuters last month was for debt to peak at 115 percent of GDP.

Given that Ireland is at the edge of debt sustainability/unsustainability, marginal improvements have to be welcomed, said Dermot O'Leary, Chief Economist at Goodbody Stockbrokers, who forecast a peak debt/GDP level of 114 percent rather than 117 percent.

International investors have warmed to Ireland in recent months after Dublin, piggy-backing on a worsening Greek crisis, won concessions amounting to around 1 billion euros (870 million pounds) annually on the cost of its own bailout loans.

(Reporting by Conor Humphries; editing by Ron Askew; editing by Ron Askew)