The Foyle MP has accused An Taoiseach of using a recent incident of generosity by Creggan-born footballer James McClean to score “cheap political points”.
Speaking in the Dail during the week Mr Varadkar was discussing the action taken recently by James when he paid for a group of homeless people to stay at a hotel in Derry.
The Stoke City and Republic of Ireland winger paid for four rooms for four nights, including the cost of meals.
The former Mayor of Derry said Mr Varadkar’s government had presided “over an unprecedented homelessness crisis”.
Addressing Sinn Fein leader Mary Lou McDonald in the chamber, Mr Varadkar noted McClean was a republican and a “very able footballer”.
“[He is] paying out of his own pocket to accommodate homeless people in the city of Derry. I think that is a really admirable thing for him to do. He must be a very generous person,” he said
“But this is the city of Derry, the city which has a Sinn Fein MP, a council on which Sinn Fein is the largest party, and is in Northern Ireland where you are supposed to be in government.
“So again you come into this house making out you have some sort of monopoly on compassion. You don’t deputy.
“If you really did care about homeless people you would get busy dealing with it in Derry.”
Mrs McCallion said: “There are a number of groups and organisations working diligently night and day across our city with people who find themselves homeless.
“I would like to invite the Taoiseach to Derry to see at first hand the work these wonderful people do.”
Mrs McCallion added she felt the Taoiseach’s remarks were being made with a view to local and European elections set to take place in the Republic next year.