The Finance Minister says he's optimistic that a deal can be done with Fianna Fáil, but that they "may not be able to settle it".

Michael Noonan's comments come as the talks are deadlocked on the issue of water charges.

Meanwhile the Environment Minister says people can't be made fools of and has questioned if those who have paid water charges are going to get refunds.

Last night talks between the two parties ended with little or no progress on the issue of water charges.

The latest compromise from Fine Gael to suspend charges for six to nine months goes nowhere near the Fianna Fáil demand to get rid of the charges for five years.

On his way into the Cabinet meeting, Minister Michael Noonan says there's a chance we'll have another election: "We may not be able to settle this one, and I think everyone knows the consequences of that

And that was a sentiment on the mind of PER Min Brendan Howlin: "We need now to bring this matter to a conclusion, or if that's not possible, then ask the people to elect into the Dail deputies who are willing to take on the responsibility of government."

On his way into Government Buildings the Environment Minister Alan Kelly questioned what would happen to those who've paid: "If, supposedly, the Irish Water charges were suspended, what are you going to do with the just under a million people who paid their bills. Will they get refunded? You can't make fools out of people."

So 60 days on it appears it is 50-50 on a deal or another election.