Secretary of State for Northern Ireland, Theresa Villiers, said tonight the situation at Stormont "looks increasingly grim" after talks she chaired with Minister for Foreign Affairs, Charlie Flanagan, broke up without agreement.
Ms Villiers and Minister Flanagan met the five parties in the power-sharing executive who are split on how to spend the reduced block grant Northern Ireland receives from Westminster.
Speaking following talks Minister Flanagan said he had underlined the Government's commitment to the implementation of the Stormont Agreement, which he said had been "hard won".
The review was organised following the failure of the Welfare Bill to secure approval in the Assembly last week, a situation that threatens the fragile agreement.
Sinn Féin is calling for the agreement to be renegotiated but the DUP has ruled out that option.
The failure to reach an agreement follows yesterday's plea from two former US congressman, who wrote to the Government and the British government, as well as the First and Deputy First Ministers of Northern Ireland, calling for all parties to reach a compromise on welfare reform.
Democratic Congressman Bruce Morrison and Republican Congressman James Walsh wrote the letter, on behalf of what they describe as a group of US experts on Northern Ireland affairs, because they feel the situation is at a critical juncture.
They proposed a compromise that they say would allow all sides to stick to what they have agreed to without jeopardising the future.
The compromise would involve all parties accepting the current cuts as proposed, but with a guarantee of no further cuts for at least three years.
Bruce Morrison - well known in Ireland because of the 48,000 Morrison visas issued to Irish people in the 1990s - said the letter was "a plea to the British government not to take a hardline position", to "the Irish Government to speak strongly to the British government about the importance of treating Northern Ireland in its special circumstances", and plea to all of the parties to "think through the puzzle".
Mr Morrison said he also would like to see a stronger role in the process of former US Senator Gary Hart.
Mr Morrison said there was not a lot of time to reach agreement, and he did not care how the parties got there, adding that whatever mechanism was the "most comfortable" for the participants was what should be done.
The letter was addressed to Minister for Foreign Affairs Charlie Flanagan, NI Secretary of State Theresa Villiers, First Minister Peter Robinson and Deputy First Minister Martin McGuinness.
He said the compromise that he and Mr Walsh had proposed was "a way to allow people to agree to what they had agreed without it becoming a slippery slope into much worse things".
He said he knew the agreement was "difficult for people to swallow" and there was a sense among some that "they didn't sign up for what the words actually came out to say".
He added that they had been close over the last few months to some kind of agreement along the lines of what was agreed at Christmas and what has to be agreed now.
But the UK election had "throw down this gauntlet" in that there now had to be "these additional cuts and be uniform across the UK", something he said would hit Northern Ireland even harder" adding that "that is not in anyone's interest".
Mr Morrison said he supported the role that former Senator Hart had played in the recent talks and that he hoped he could play a stronger role yet.
He said he hoped that people would "take advantage of his wisdom" and "give him the opportunity to work with these ideas to get some basis for agreement".
