£1bn pledge for devolution return

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Chancellor Gordon Brown has promised Northern Ireland an extra £1bn if devolution is restored on Monday.

He made the announcement after meeting the four biggest political parties at Downing Street and described it as an historic opportunity to move forward.

The cash is on top of £35bn pledged by the government over four years.

Northern Ireland politicians have cautiously welcomed the announcement, but the DUP has yet to confirm whether it is willing to share power.

While the DUP refuses to talk directly to Sinn Fein, the chancellor insisted he saw the four main parties together.

Observers described the atmosphere as very cordial and said the Northern Ireland politicians acted like a power-sharing executive in waiting.

Mr Brown said: "This is an historic opportunity to move forward.

"I believe the Northern Ireland political parties are all serious about what can be done to achieve that.

"I believe that today by making possible the resumption of the executive through having the resources that they need, the potential for creating the jobs that they can and helping look at some of the challenges they face, we can move this process forward."

The parties have until 26 March to agree on power-sharing

Of the extra £1bn, £400m has been pledged by the Irish government.

It is expected to be spent on projects like a major motorway to Donegal and Londonderry - the biggest-ever cross-border project.

Irish Finance Minster Brian Cowen said the road would remove the "single biggest impediment" to the future development of the North West and the border counties.

"It will be the biggest and most important cross-border project ever on this island," he added.

Mr Cowen said Mr Brown's package offered a real opportunity for economic progress to accompany political stability in Northern Ireland.

It is understood the British money could be used to delay and reduce the new water charges.

DUP leader Ian Paisley described the chancellor's offer as "modest progress".

Sinn Fein said while progress had been made, more work still had to be done.

Ulster Unionist leader Sir Reg Empey said the talks had produced "some modest improvement". These sentiments were echoed by SDLP leader Mark Durkan.

The Northern Ireland Assembly has been suspended since October 2002, amid allegations of an IRA spy ring at Stormont.

A subsequent court case collapsed. Direct rule has been in place since that date.

The two governments have given the parties until 26 March to set up a power-sharing executive, otherwise Stormont will be dissolved.