Direct rule has been re-imposed in Northern Ireland despite a last-minute Sinn Fein bid to break the deadlock over arms.

Northern Ireland Secretary Peter Mandelson said there had been some progress in discussions aimed at halting the process of suspending the Assembly, but not enough.

Minutes earlier, Sinn Fein president Gerry Adams said a "new and significant proposition to resolve the arms issue" had been put to the British and Irish Governments.

Mr Adams, describing the plan as of "enormous significance", said the IRA would "set out the context in which it will deal with the issue of arms".

Despite the suspension, Mr Mandelson suggested the issue could be resolved "very quickly indeed".

He said: "We must clear up the issue of decommissioning once and for all - it has dogged the peace process.

"It is difficult to gage exactly what is on offer from Sinn Fein and the IRA.

"If it is as good as some suggest, it will provide a good basis for resolving this issue once and for all."

Speaking after the announcement, Gerry Adams said the UK Government had seen a second decommissioning report from General John De Chastelaine, which is believed to have set out more details of the IRA's latest offer.

He urged London to publish the report.

He said it was "beyond comprehension" that Mr Mandelson had gone ahead with suspension having "detailed knowledge" of the proposal.

Ulster Unionist leader David Trimble said he regretted the fact suspension had become necessary.

He said: "This is not an event in which we take any pleasure at all.

"The background to this was our decision at the end of November to jump first in the expectation that the republican movement would reciprocate.

"When it became clear that the republicans had failed to jump then our position became impossible".

It is unclear exactly what will happen next but there will probably be another review after a short breathing space to consult all sides.

Resolve issue of arms

Mr Adams, in his statement just before suspension was announced, said: "Sinn Fein's concern is to see this issue settled in such a way as to ensure maximum public confidence in the process and resolve the issue of arms in a complete way.

"When set alongside the IRA's recent assertion that the peace process is under no threat from it, and that its guns are silent, this new development takes on an enormous significance, and can, if there is the political will and good will, finally resolve the matter."

The Assembly has been in existence for only nine weeks.

The crisis threatening the fragile peace process has been brought about by the lack of progress on arms decommissioning and in particular the absence of any handover of IRA weapons.

Mr Trimble had said he would resign as Assembly First Minister if disarmament did not begin.

His resignation would have collapsed the institutions and made it much harder to get them up again.

Mr Trimble faces a crunch meeting of his 800-strong party's ruling council in Belfast on Saturday where the lack of progress on arms decommissioning will be debated.