The British government will have to look at all options if political parties in Northern Ireland fail to reach an agreement to work together, MPs in the House of Commons were told on Tuesday.
Secretary of State for Northern Ireland James Brokenshire said he did not want to see direct rule from Westminster being re-introduced, Xinhua reported.
It led to a former Secretary of State calling on Prime Minister Theresa May to take control as one of the leading newspapers in Belfast described the situation as a crisis.
Brokenshire was speaking less than 24 hours after a Monday deadline passed for the parties in Northern Ireland to agree to form a power-sharing executive.
He said he had been engaged in intensive talks with the two main political parties the Democratic Unionist Party and Sinn Fein, as well as the other parties and the Irish government, in line with a well-established three-stranded approach.
"From all my extensive engagement across Northern Ireland with business, civil society and members of the public, I am in no doubt inclusive devolved government is what the overwhelming majority of the people want to see," he said.
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"Yet following the passing of yesterday's legal deadline, Northern Ireland has no devolved administration. This also means that other elements of the Belfast Agreement, including the North-South Bodies, cannot operate properly. The consequences of all of this are potentially extremely serious," added Brokenshire in his statement to MPs.
Brokenshire said he was encouraged that there remains a strong willingness to continue engaging in dialogue with a view to resolving outstanding issues and forming an executive and that must absolutely remain a priority.
He added: "Should the talks fail in their objectives the (British) government will have to consider all options.
Brokenshire said if talks collapse he will quickly bring forward legislation after the Easter recess to allow an executive to be formed, avoiding a second Assembly election.
That proposal drew an immediate response from Sinn Fein leader Michelle O'Neill who insisted the only option under the current law was to order another snap election.
O'Neill said: She added: "There is no legal basis for any other course of action. And while parties may, or may not, want an election the fact is if the British secretary of state brings in new legislation to restore direct rule that will be an act of bad faith and a clear breach of an agreement between the Irish and British governments in 2006."
Under an agreed peace formula that brought an end to three decades of trouble, a power sharing agreement was reached. This requires the two main parties, the DUP and Sinn Fein to fill the top two jobs as leader and deputy in the devolved parliament at Stormont.
The Belfast Telegraph newspaper described the situation at Stormont as a crisis.
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