Northern Ireland Secretary of State James Brokenshire has said that the British government has extended the deadline for Sinn Féin and the DUP to reach a deal to restore power-sharing.
Both parties left Stormont shortly before 9pm last night without a deal.
They had been warned by Mr Brokenshire that they had until yesterday to produce a written agreement or he would be forced to legislate for a budget for the region at Westminster.
However, last night he said that the parties had made progress and he was going to defer his decision to legislate for a budget.
In a statement, he said: "The parties have made further progress during the course of today.
"They are making certain additional requests of the UK government, which we need to consider.
"In the light of this, I believe it is right to defer the assessment on whether to introduce legislation to parliament this week to enable an executive to be formed.
"The parties will recommence talks in the morning and I will reassess the position tomorrow night."
Negotiations at Stormont between Sinn Féin and the DUP have broken up for the night – RTÉ's Northern Editor Tommie Gorman reports pic.twitter.com/nZqmnGek89— RTÉ News (@rtenews) October 30, 2017
The Northern Ireland Executive collapsed in January and it has been without a power-sharing government since then.
Despite endless rounds of discussions, a deal to restore devolution has proved elusive with the introduction of an Irish language act seen as the main issue.
Mr Brokenshire and Minister for Foreign Affairs Simon Coveney were in Belfast to try to help find a breakthrough in the political deadlock.
Sinn Féin leader Gerry Adams and deputy leader Mary Lou McDonald also joined their party's negotiating team at Stormont.
Throughout the day the DUP, Sinn Féin and the Irish and British governments stayed tight-lipped about any progress in the negotiations.
The smaller parties held a meeting earlier in the day to discuss the lack of openness and transparency in the talks.
Before talks began this morning, the DUP called on Mr Brokenshire to set a budget to ensure a "measure of good government".
The party said it would not accept "a bad agreement cobbled together to suddenly suit the timetables of others".
"Our position has not changed, we want to see an executive set up - we would have done it March and sorted these issues in tandem.
"Given Sinn Féin have dragged their feet over the last ten months the secretary of state should bring forward a budget to bring a measure of good government to Northern Ireland."
The DUP said it would continue the discussions as it believes "devolution is best for Northern Ireland".
Sinn Féin's Conor Murphy said while a deal could still be done it "needs to be a deal for all in our society and not just for the political leaderships of unionism".
"If the political institutions are to be sustainable then they must be restored on the basis of equality, rights and respect.
"That requires an end to the DUP's denial of rights citizens enjoy everywhere else on these islands, language rights, marriage rights and the right to a coroner's court."
British Prime Minister Theresa May's official spokesman said the government was still working with the parties on reaching an agreement.
He said: "We have had progress but there are still significant gaps which remain and we continue to work with them to overcome these.
"You can expect James Brokenshire to update parliament later this week on how that is progressing.
"We continue to work with the parties on trying to overcome the differences between them and to restore devolved government, which is in the interests of all communities in Northern Ireland.
"We are clear we don't want to see a return to direct rule, we want a return of devolved government in Northern Ireland, so that local decisions can be made by local politicians.
"James Brokenshire has been clear that the latest we can practically introduce legislation to enable the executive's formation would be this week in order for it to be in time for a new executive to set a budget."
Earlier, SDLP leader Colum Eastwood said that if a deal was not reached by yesterday's deadline, his party will not accept direct rule from Westminster, but only joint rule from both London and Dublin.
Alliance Party leader Naomi Long has called on Mr Brokenshire to reduce MLAs' pay by 30% if no progress is made.