Talks to save Ulster power-sharing deal go into their second night

But discussions on the devolution of policing and justice powers from London to Belfast had been "positive and constructive", Irish foreign affairs minister Micheal Martin said.

The talks are focusing on a date for the transfer, possibly before the UK general election, and a replacement for the body which rules on Orange Order parades.

Speaking outside Hillsborough Castle near Belfast, where the talks are being held, Mr Martin said: "Both governments remain satisfied at the level of engagement by all of the parties and the party leaders and indeed by the participants in the discussions.

"They are determined to see a resolution to this."

Prime Minister Gordon Brown and Taoiseach Brian Cowen arrived on Monday night to lead the crucial talks, which ran until the early hours of this morning before continuing today.

It also emerged the US administration is keeping a close eye on the negotiations, Mr Brown holding a phone conversation with US Secretary of State Hillary Clinton this afternoon.

Northern Ireland Secretary Shaun Woodward said talks would continue as long as necessary.

Sinn Fein and the Democratic Unionist Party – Northern Ireland's two biggest political parties – have been arguing for months over the transfer of policing and justice powers from Westminster to Stormont.

Sinn Fein wants the completion of devolution as soon as possible, but the DUP argues there must be unionist "community confidence" first.