Peter Hain threatened to stop salaries and allowances if no real movement was made towards returning the Stormont Assembly. He said MLAs were getting £32,000 ( 47,000) salaries for a job which they will not take responsibility for doing.

"I'm not giving a particular month, but I am saying that if we haven't seen progress by the summer, the first decision I'm going to have to take is over continued payment of salaries and also allowances, " he said. "You have got more being paid in costs, in legitimate costs for staff, for the services they provide, for travel and subsistence and all the rest of it, as well as £32,000 salaries for assembly members elected to a job which they won't take responsibility for doing."

In his New Year message, Hain had already warned there would be little point in having elections to an Assembly in 2007 if there was no meaningful devolution. He said unionists needed to know republicans were serious about their commitments to totally lawful means.

But he also acknowledged that nationalists wanted to know unionists were serious about sharing power on a genuinely equitable basis.

After the power-sharing executive collapsed in October 2002, the House of Lords agreed Assembly members would continue to receive a reduced salary of almost £32,000 as they held representative duties.