Secretary of State Peter Mandelson has said he would have "no choice" but to suspend Northern Ireland's fledgling government to keep the peace process alive unless the IRA steps back from its refusal to disarm.

However, Mr Mandelson said: "Intensive discussions have been going on all this week, so that if there is a breakthrough on the part of the IRA in relation to decommissioning, I will certainly welcome that.

"But as yet I have no information."

Mr Mandelson told Sky News on Friday, the ball was in the IRA's court.

In an interview on BBC Radio Ulster, Mr Mandelson said that intensive discussions had been going on over the last week, yesterday and even overnight.

"I don't know of any last minute breakthrough but there is still some time and I will be talking to people again during the course of the morning."

He said that while there was no IRA statement on the table there had been a lot of discussions between the IRA and Sinn Fein and they had been considering a number of different way in which they might be able to find a way forward.

"It's not a set of words we're looking for or some pat formula - what we need is just a clear statement. Are they going to decommission or not and if so, when?

"We've had answers to neither of those two questions."

The Bill allowing Mr Mandelson to suspend the Stormont Assembly and other institutions after just 72 days of devolved government in Belfast was given Royal Assent on Thursday after being rushed through Parliament.

However, frantic efforts were expected to continue throughout the day to try to resolve the decommissioning crisis which has bought the institutions to the brink.

Yesterday, Prime Minister Tony Blair and Irish premier Bertie Ahern were in regular contact with each other and other key players in the hope a formula could be worked out to guarantee an IRA arms handover.

But as the clock ticked on, Mr Blair's official spokesman said it would take something "dramatic" to prevent an announcement from Mr Mandelson.

The Government is stressing suspension is the best way to preserve the institutions in the longer-term.

If First Minister of the Northern Ireland Executive David Trimble resigns then the institutions would collapse and sources are saying it is the "political reality" that they would be much harder to get back up again.

It is unclear exactly what will happen next if the institutions are put on hold, but there will probably be another review after a short breathing space to consult all sides.

Theoretically, Mr Mandelson could wait till midnight to make an announcement, but it is understood he will probably act sooner rather than later if there is no sign of a breakthrough.

Mr Trimble faces a crunch meeting of his party's ruling council in Belfast on Saturday morning and the Secretary of State, who praised the First Minister's leadership on Friday, is unlikely to leave him hanging on until then.

Mr Trimble, who met Mr Ahern in Dublin on Thursday, admitted the situation was very serious, but he stressed it was by no means the end of the peace process. "People would be wrong to regard this as being a terminal crisis in the (Good Friday) Agreement. It is not that," he said.

He said:"No matter what difficulties we might have, no one should regard that as being the end of this process."