Taoiseach Bertie Ahern and British Prime Minister Tony Blair have told the North's political parties that power sharing must by fully restored by November 24th.
If this deadline is missed, the Assembly will be wound up indefinitely, elections in 2007 will be postponed and the salaries and allowances of MLAs will be cancelled. Political institutions have been suspended since October 2002.
Joint statement of Irish and British governments
Under the latest plan, unveiled by Mr Ahern and Mr Blair in Armagh city this morning, the governments said the Assembly must meet from May 15th and attempt to form an Executive within six weeks if possible but before an absolute deadline of November 24th.
The Assembly's first job will be to elect a First and Deputy First Minister and to allocate ministerial posts.
As soon as the Assembly elects a First and Deputy First Minister and forms an Executive, power will automatically be devolved to the Assembly, and all its functions will be resumed. At this point the British government's power to suspend the Assembly will lapse for good.
However, the governments warned the parties that this was their final chance.
"We do not think that the people of Northern Ireland should be asked to participate in elections to a deadlocked Assembly," the two leaders said in a joint statement issued in Armagh city this morning.
In the event of failure to meet the November deadline, the statement added, arrangements will be put in place to ensure that the Belfast Agreement "is actively developed across its structures and functions.
Tony Blair addresses the media in Armagh today
"This work will be shaped by the commitment of both Governments to a step-change in advancing North-South co-operation and action for the benefit of all."
The leaders said they were "convinced that the IRA no longer represents a terrorist threat".
Describing it as a "momentous stage" in the history of Northern Ireland, the governments sent thinly veiled messages to both the DUP and Sinn Féin.
They urged "all parties to engage in political dialogue", a comment clearly aimed at unionists. They also made it clear that "all parties should support the police as the most effective way of addressing continuing concerns about criminality", a statement aimed at republicans.
"We cannot force anyone to enter the political institutions", the statement continued. "There is a great deal of work to be done. The governments will do all in their power to restore the institutions and return devolved government to those elected by the people of Northern Ireland.
"But the final decisions are for the parties. We hope they will seize the opportunity to move forward."
Today's announcement has been overshadowed by the murder on Tuesday of former Sinn Féin official and British agent Denis Donaldson. Some sources have suggested republicans may have killed him in Co Donegal, but the governments said they belived it had not been sanctioned by the IRA leadership.
Addressing the murder at today's press conference Mr Ahern said: "Today here in Armagh is about putting that past behind us once and for all.
"Both the prime minister and I are united in our conviction that the devolved government of the Good Friday Agreement is what will best allow Northern Ireland to move on and to prosper," he said.
