The British and Irish governments must now assess whether next May's scheduled Assembly elections should be cancelled or postponed, according to well-placed sources.
The Minister for Foreign Affairs, Mr Cowen, and the Northern Secretary, Dr John Reid, are to meet in Dublin this afternoon to assess the fallout from the Ulster Unionist Party's threat to collapse the North's power-sharing administration.
The two will take stock of the ultimatum by the UUP leader, Mr David Trimble, that he and his ministers will pull out of the Executive after January 18th if the IRA has not disarmed and disbanded by then.
The SDLP and Sinn Féin leaders, Mr Mark Durkan and Mr Gerry Adams, will meet Mr Cowen separately in Dublin tomorrow while Dr Reid makes contact with senior politicians, including Mr Trimble.
Dublin and London are at something of a loss as to the best course of action to retrieve a deteriorating political situation.
The two governments are concerned that there is little prospect of a resolution to a developing crisis ahead of the Assembly elections scheduled for May. They suspect that the IRA will not respond by the January deadline to the UUP demand and that in any case Ulster Unionists would prefer to be fighting Assembly elections outside the Executive.
At today's meeting Mr Cowen and Dr Reid will initially consider whether the Assembly elections can be held at all. "The question they have to consider is: if the parties remain as deadlocked as they are now what would be the point in calling elections," one source explained. It's a question they won't be able to answer today. If, however, in the months ahead there is a good possibility that a fully operational power-sharing Executive could be restored involving the UUP, the SDLP, Sinn Féin and the DUP, then elections would be called, he added.
The Deputy First Minister, Mr Mark Durkan, held meetings with Mr Adams, the Women's Coalition and the Progressive Unionist Party at Stormont yesterday to assess the implications of Saturday's Ulster Unionist Council Executive withdrawal threat.
Mr Durkan insisted that there could be no renegotiation of the Belfast Agreement and accused Mr Trimble and the Ulster Unionist Council, which on Saturday threatened to withdraw from the Executive, of playing into the hands of paramilitaries.
"I am not sure that it is wise for democrats to address the paramilitaries on the basis of , 'Either you go or the democratic institutions go'," he said. "In that situation, the paramilitaries would be quite happy to say, 'Bye-bye democratic institutions'. I don't think we should be giving them that whip hand over democracy," he added.
Mr Durkan also noted that this prospective crisis was happening at a period when the Assembly was dealing with the Executive's draft budget and draft programme for government - signs that devolution was working.
Mr Adams said the British government should not suspend the institutions of the Belfast Agreement if UUP ministers quit the Executive after January 18th.
"Tony Blair should not be following the Unionist agenda and should not be even contemplating suspending the institutions," Mr Adams said.
His party had consulted its lawyers over Ulster Unionists' decision not to attend North-South Ministerial Council meetings involving Sinn Féin, although this did not necessarily mean legal action would be taken.
He also said that the threat to withdraw from government would encourage loyalist paramilitaries to target Catholics in sectarian murder attacks.