Northern Ireland Secretary Chris Heaton-Harris is set to announce that the UK government intends to extend the deadline for calling a fresh Assembly election, Sky News understands.
Mr Heaton-Harris is expected to extend the current 19 January deadline by six weeks, with an option to extend it by a further six weeks if necessary.
The move gives parties in Northern Ireland more time to break the stalemate at Stormont.
Cutting the pay of Assembly members while Stormont remains in deadlock is also likely to be proposed.
The Northern Ireland secretary is set to give a statement in the House of Commons later on Wednesday to announce his plans.
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The moves will require legislation to be laid and passed at Westminster.
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The deadline for the Northern Ireland parties to form a fresh power sharing executive ran out on 28 October.
The current law states that Mr Heaton-Harris is obliged to call a fresh election within 12 weeks of the deadline passing – which would be 19 January.
A Democratic Unionist Party boycott of the devolved institutions, in protest at Brexit’s Northern Ireland Protocol (NIP), has prevented an administration being formed since the May election earlier this year.
The protocol was aimed at avoiding a hard border with Ireland but has created economic barriers on the movement of goods between Great Britain and Northern Ireland, causing resentment and anger among many unionists and loyalists.
The DUP has refused to return to Stormont until decisive action is taken over the treaty.
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Last week, the Northern Ireland secretary confirmed that a Stormont election will not be held in December, saying he had listened to “sincere concerns” across the region about the impact and cost of a fresh poll at this time.
In a statement, Mr Heaton-Harris said: “At midnight on 28 October, I came under a duty to call an Assembly election.
“Since then, my engagement with the political parties has continued.
“I have had valuable conversations with people across Northern Ireland, including business and community representatives.
“I have listened to their sincere concerns about the impact and cost of an election at this time.”
He added: “I can now confirm that no Assembly election will take place in December, or ahead of the festive season.”
Read more:
Why is there still no assembly and what does Brexit have to do with it?
Responding to the delay, DUP leader Jeffrey Donaldson tweeted: “We need a razor sharp focus on getting a solution, whether by negotiation or legislation.
“There is no solid basis for a fully functioning Stormont until NIP is replaced with arrangements that unionists can support. Progress in NI only made when unionists and nationalists are aboard.”
Meanwhile, Sinn Fein Stormont leader Michelle O’Neill has accused Mr Heaton-Harris of “more dithering and indecision”.
She said: “The British government are fuelling the political instability caused by the DUP’s failure to recognise the result of the May election when the people voted for change.
“This is totally unacceptable at a time when workers, families and small businesses are struggling through the cost-of-living crisis and a cold winter, and when our health service needs immediate investment.”
The UK government has vowed to secure changes to the agreement, either by way of a negotiated compromise with the EU or through proposed domestic legislation which would enable ministers to scrap the arrangements without the approval of Brussels.
Opponents have likened the Northern Ireland Protocol Bill to “placing a gun on the table” at talks with the EU aimed at finding a solution and argues it breaks international law as well as risking a trade war.
