Progress to restore Northern Ireland devolution has been "remarkable but is not yet complete", Tony Blair has said.
The premiers travelled to Belfast to publish their proposals
Hopes for a deal were dashed after Ian Paisley's DUP said it was not signing up, because the IRA was refusing photographs of decommissioning.
Prime Minister Blair and Irish premier Bertie Ahern published joint government proposals for power-sharing in Belfast.
He said if a deal had been reached there was agreement to complete IRA decommissioning by Christmas.
Northern Ireland's political institutions have been suspended since October 2002 amid claims of IRA intelligence-gathering at the Northern Ireland Office.
Tony Blair and Bertie Ahern's news conference came just hours after Mr Paisley confirmed a deal to restore devolution would not be signed.
Mr Blair said: "I think there is an inevitability about this process which is locked in. I can't see this process going backward but I do know that it's going to require extra effort to finish the journey.
"This is a transformed landscape in which we operate today but it won't be properly transformed until we have the devolved institutions back up and working again."
Referring to the IRA's refusal to allow photographic evidence, Mr Blair was anxious to play down the notion the IRA had made any commitment to this and then reneged on it.
"There is no allegation of bad faith here," he said.
Irish Prime Minister Bertie Ahern said the governments had worked on the proposals throughout 2004.
"Today is truly different - I don't think it, I know it. We had obviously wished to be able to present the proposals in the context of full agreement before we came here - but that is not possible.
"We are not quite at that point of total success. Our work must therefore continue to secure agreement and closure and what - by any standards - is a huge, impressive, indeed a landmark package."
He added: "We believe at this point, after many months of negotiation, our efforts will benefit from wider public appraisal and that is why we are publishing our proposals."
Sinn Fein President Gerry Adams said that progress was being held up by "the demand for a process of humiliation".
Mr Adams said the issue of photographs of decommissioning was first raised with the party in the week before the Leeds Castle talks in September.
Mr Adams said: "We were told by the two governments that this was a DUP demand and we told the governments, in our view it was not achievable.
"We were surprised on November 17 when we received their joint statements when this demand was contained in a paragraph of a draft IICD report.
"We made it clear then, that this wasn't a runner, in fact we asked the governments to take it out of their draft outlines. They explained to us there was no other way of getting the DUP to look at this."
DUP leader Ian Paisley said Sinn Fein had "pulled the plug" on the deal.
Mr Paisley said "significant progress" had been made on all aspects of the comprehensive agreement with the exception of how decommissioning would be handled.
He said: "We were in the process of resolving these outstanding matters when IRA/Sinn Fein brought their discussions with the government to an end.
"It is clear from the remarks of the prime minister and Bertie Ahern where the responsibility lies for the current impasse.
"One hardly needs to read between the lines to see that it was inability of the republican movement to decommission in the manner that was expected by the two governments. No should be in any doubt it was the IRA that said 'no'."
The SDLP's Mark Durkan said he did not want to become involved in a "blame game" over who was responsible for the failure of the deal.
He said: "Rather than 'another fine mess' we want to take this as 'another near miss' and work to get things over the line."
And he called for all parties to become involved in the talks.
There have been intensive negotiations between the two governments and the political parties over the past few weeks.
The main issues which have been highlighted in the latest round of intense talks include decommissioning, demilitarisation, policing and future devolved institutions.
The negotiations have been conducted through a series of British and Irish Government intermediaries because the DUP refused to hold face-to-face talks with Sinn Fein.