British Prime Minister Gordon Brown and his Irish counterpart Brian Cowen insisted after the talks broke up on Wednesday that “progress” had been made and there was scope for an agreement.

Britain and Ireland helped broker the 1998 Good Friday Agreement, which largely ended three decades of violence that killed at least 3,500 people and led to the creation of the power-sharing executive.

Deputy First Minister Martin McGuinness of Sinn Fein said: “I believe we have displayed extraordinary patience and commitment over the past 18 months as we sought to persuade the Democratic Unionist Party to be partners of progress.”

He cautioned however, in regard to the 48-hour deadline: “If we judge that insubstantial progress has been made we will publish our own proposals.”

But Brown warned that if the Democratic Unionist Party (DUP) and Sinn Fein fail to hammer out a deal within 48 hours, London and Dublin would publish their own plans to move the process forward.

A US official with Secretary of State Hillary Clinton in London said she offered “support and encouragement” and was monitoring the situation closely, although she had no plans to visit the province.

Brown stressed that both Britain and Ireland would prefer the parties to reach agreement themselves.

Transferring responsibility for policing and justice from London to Belfast is one of the final steps to full devolution envisaged in the 1998 accords that ended the province’s long-running sectarian conflict.

But Northern Ireland is still dogged by sporadic violence. A policeman and two soldiers were shot dead last year in attacks blamed on dissident republicans and a policeman lost a leg in a car bomb attack this month.

Sinn Fein, which favours a united Ireland and is the largest Catholic party in the province, said it was “deeply disappointed” at the outcome, which it blamed on DUP demands for concessions on controversial Protestant parades.