Northern secretary Peter Hain has signalled that water charges in the North could be abolished if the DUP agrees to share power with Sinn Féin and the other parties by Monday week.
Mr Hain hinted yesterday that in the "crucial countdown" to the Monday deadline the British government could be persuaded to provide additional funding that could allow the Northern executive get rid of water charges.
Mr Hain met the Minister for Foreign Affairs Dermot Ahern at Hillsborough Castle to discuss the lead-up to March 26th and the British-Irish financial package aimed at helping prop up the Northern executive.
Virtually all politicians agreed that during the election campaign the main issue on the doorsteps was water charges rather than constitutional matters. The water bills, which start off at an average annual cost of about £150 rising to about £400-£450 by year three of the charges, are due to kick in next month.
The DUP and Sinn Féin and the other parties oppose the charges and have been canvassing the British government to halt their implementation.
Mr Hain said that on Thursday week the parties would meet him and the British chancellor of the exchequer Gordon Brown to discuss the issue of a financial package, which would include addressing the matter of water bills.
He said that if the parties could not agree to powersharing direct rule would continue and the water charges would be implemented, as would increased domestic rates. However, if the executive was formed on Monday week he said the British government would consider very seriously any alternative proposals on water charges put by the executive.
"We want to encourage the successful start to devolution and an incoming executive, and clearly the electorate made clear their feelings on water charges to the parties - it was the biggest issue on the doorstep and the biggest issue at the polling stations," he said.
"Obviously we would have to take account of that for an incoming executive. But if we stay in charge the policy will remain unchanged on all of these issues," added Mr Hain.
He also indicated that Mr Brown was likely to be supportive in providing additional funding to bolster devolution but that some of the "telephone number money that I read about is simply unrealistic".
Mr Ahern said that Minister for Finance Brian Cowen was in contact with Mr Brown on the issue of funding. "We are more than willing to contribute to a financial package on the basis that it is of mutual benefit to people North and South," he said.
The British and Irish governments' carrot and stick approach to achieving a deal by Monday week continued yesterday. While there was the promise of more money Mr Hain and Mr Ahern repeated that without agreement by the deadline the new Assembly would be dissolved and water charges and additional rates would proceed as originally planned.