Northern Ireland Secretary of State James Brokenshire has extended the deadline for the region's two main parties to reach a deal to restore powersharing.
The DUP and Sinn Fein left Stormont shortly before 9pm on Monday having failed to reach an agreement.
They had been warned by Mr Brokenshire that they had until Monday to produce a written agreement or he would be forced to legislate for a budget for the region at Westminster.
However, on Monday night he said that the parties have made progress and he was therefore going to defer his decision to legislate for a budget.
In a statement he said: "The parties have made further progress during the course of today.
"They are making certain additional requests of the UK Government which we need to consider.
"In the light of this, I believe it is right to defer the assessment on whether to introduce legislation to Parliament this week to enable an Executive to be formed.
"The parties will recommence talks in the morning and I will reassess the position tomorrow night."
The Northern Ireland Executive collapsed in January and the region has been without a powersharing government since then.
Despite endless rounds of discussions, a deal to restore devolution has proved elusive with the introduction of an Irish language act seen as the main issue.
Mr Brokenshire and Irish Foreign Affairs Minister Simon Coveney were in Belfast on Monday to try and help find a breakthrough to the political deadlock.
Sinn Fein's Gerry Adams and Mary Lou McDonald also joined their party's negotiating team at Stormont.
Throughout the day the DUP, Sinn Fein and the Irish and UK Governments stayed tight-lipped about any progress in the negotiations.
The region's smaller parties held a meeting earlier in the day to discuss the lack of openness and transparency in the talks.
Before talks began on Monday morning the DUP called on Mr Brokenshire to set a budget to ensure a "measure of good government" in the region.
The party said it would not accept "a bad agreement cobbled together to suddenly suit the timetables of others".
"Our position has not changed, we want to see an executive set up - we would have done it March and sorted these issues in tandem," said the party in a statement.
"Given Sinn Fein have dragged their feet over the last 10 months the secretary of state should bring forward a budget to bring a measure of good government to Northern Ireland," the statement added.
The DUP said it will continue the discussions as it believes "devolution is best for Northern Ireland".
But it warned that it would not be a part of a "bad agreement cobbled together to suddenly suit the timetables of others".