Sinn Féin and the DUP are blaming each other for a 10-month stalemate in setting up a Northern Ireland executive at Stormont.
It comes as the Northern Ireland Secretary James Brokenshire is moving to bring forward a budget for Stormont from Westminster.
The two parties have been locked in talks with no sign of agreement.
The Stormont Executive has not sat since January.
Mr Brokenshire says while talks will keep going, he has no option but to start preparations to impose a budget from London.
"I'm therefore not in a position to introduce the legislation necessary for an executive to be formed this week.
"Though I must stress we are continuing to work with the parties as they proceed with on-going talks.
"As I've outlined previously, there are consequences to not being able to bring forward this legislation this week."
"It is now very unlikely that an executive will be in place within a timetable to pass a budget by the end of November - which is the point at which we and the Northern Ireland civil service assess that Northern Ireland will begin to run out of resources.
"No government could simply stand by and allow that to happen.
"I'm therefore now taking forward the necessary steps that would enable a budget bill to be introduce at Westminster in order to protect the delivery of public services".
Foreign Affairs Minister Simon Coveney | File photo
Foreign Affairs Minister Simon Coveney said: "This would represent a significant step in the budgetary process for Northern Ireland this year, which should have been considered and decided upon by the power-sharing executive and the assembly.
"I acknowledge that this step would be taken by Secretary of State with the utmost reluctance and at the latest possible juncture in accordance with the British Government's responsibility to ensure good governance in Northern Ireland.
"Both Governments share the view that it is regrettable and deeply concerning that, eight months after the last assembly election, a power-sharing executive is not in place to make the necessary decisions, including on budgetary issues, for Northern Ireland."
'The issue of rights is not going away'
Sinn Féin's leader in the North, Michelle O'Neill, said: "The British Secretary of State has said that he is not in a position to bring forward legislation to re-establish the executive this week. That is true. Why is that so?
"It is in part because of Mr Brokenshire’s tolerance of the DUP’s blocking of the equality agenda, the reneging on past agreements and recent financial scandals.
"Over the last 10 months, the focus of these negotiations has been on the delivery of rights which are the norm everywhere else on these islands.
"Many of these rights are fundamental parts of the Good Friday and other agreements. They are for the benefit of all sections of society and threaten no-one.
Michelle O'Neill is seen in Belfast | Image: Mark Marlow/PA Wire/PA Images
"Furthermore, marriage equality, language rights, the Bill of Rights and the right to coroners inquests are supported by a majority in the assembly and in wider society.
"The only reason they are denied is because of DUP resistance to the rights agenda and the British government’s acquiescence in this.
"That has been compounded by the Tory-DUP pact.
"The British Secretary of State is wrong when he says that it only the parties themselves who can reach agreement, he and the Irish Government also have obligations."
"The issue of rights is not going to go away. The DUP and British Government know this.
"These rights must be satisfactorily dealt with. Sinn Féin is disappointed that the last few weeks of negotiations have ended in failure."
The DUP' MP Gregory Campbell said: "For 10 months, SF has blocked key decisions being taken about Northern Ireland's infrastructure development and reforms in our health and education services.
"For SF to then complain about the speed of progress, is nothing short of rank hypocrisy.
"The DUP stands ready to form an executive today. We want devolution. Arlene Foster has led our talks team and is rightly frustrated that government is being held back by a narrow political agenda.
"Decisions being taken in the House of Commons instead of at Stormont is not what we want but civil servants must have a legal basis to spend money.
"That is why the Secretary of State needs to set a budget. SF's opposition to this is foolish. Day-to-day services should not be disrupted because of the Irish language.
"With regard to an Irish Language Act, it already receives ample public funding for those who wish to speak it or learn it. It already is catered for in ways that no other minority language is.
"We cannot and will not be party to an agreement that elevates the Irish language not only above all others, but above health, education and other vital public services."