The Northern Ireland Secretary, Mr Peter Mandelson, has tabled controversial draft legislation which, if enacted, would result in the Union flag flying over buildings where Sinn Fein's education and health departments are housed.
His proposals have angered Sinn Fein, which said that the draft legislation was contrary to the Belfast Agreement. The Sinn Fein Education and Health Ministers, Mr Martin McGuinness and Ms Bairbre de Brun, have consistently said that they will not allow the Union flag to fly over their departments.
Mr Mandelson has also proposed that the Twelfth of July should no longer be a designated day for flying the Union flag, a move which will anger many unionists.
The Northern Secretary said that his proposals were "unlikely fully to satisfy either side", but were "a sensitive, common-sense way forward", which he hoped everyone would take time to consider.
Mr Mandelson specifies seven "government buildings" on which the Union flag should fly on 17 designated days. Two of these are Rathgael House, where the finance and education departments are based, and Castle Buildings, Stormont, where the health department and the Northern Ireland Office are located. The proposals also state that the Union flag "may" be flown on government buildings during the visit of a head of state.
Mr Mandelson's hope is that Sinn Fein would be party to an interpretation that the flag is hoisted over a government building but not specifically over its departments.
A Northern Ireland Office source said that in Castle Buildings the annexe where the health department was based did not have a flagpole and that therefore Sinn Fein could argue that the flag would only fly over the Northern Ireland Office.
Sinn Fein, in its initial reaction, appeared to be unwilling to accept any such interpretation. Mr Alex Maskey MLA accused Mr Mandelson of engaging in a "headlong rush" to satisfy a "unionist agenda . . . in line with his dilution of the Patten proposals".
The DUP deputy leader, Mr Peter Robinson, said that the legislation was "full of loopholes" because it would allow Sinn Fein ministers to set up their departments elsewhere and avoid flying the flag. He said that Parliament Buildings at Stormont, where the Assembly sits, should have been designated as a government building.
Mr Robinson complained about the proposal to remove the Twelfth as a designated day. "This is clearly a move to placate Sinn Fein", he said.
The proposals also stated that the Union flag "may" be flown at government buildings during the visit of a head of state. They further propose that it should fly over government buildings during a visit of the British monarch.
Mr Mandelson has given the parties until October 20th to respond to the proposals, which are titled the Flags Regulations (Northern Ireland) Order 2000. In the meantime, flags will be the first item on the agenda when the Northern Ireland Assembly reconvenes after the summer break on Monday.
An all-party ad-hoc Assembly committee is to be set up to consider the draft regulations. The committee's brief is to resolve the issue of flying flags from public buildings, rather than have Mr Mandelson impose his regulations.
Decisions by the two Sinn Fein Ministers, Mr McGuinness and Ms de Brun, not to fly the Union flag from their departmental buildings on a number of occasions have angered unionists.
Mr Mandelson emphasised that the proposals were for consultation. "There is no perfect solution to this issue, otherwise the parties and the Executive would have found it", he added.
At present, there are 21 designated days for flying the Union flag. The proposal is to reduce this to 17, removing the Twelfth, New Year's Day, Christmas Day and Easter Sunday from the list. Sinn Fein argues that either the Tricolour should be flown alongside the Union flag outside public buildings, or no flags should be flown.