Foreign Affairs Minister Micheal Martin said today he believed Northern Ireland's power-sharing government could be rescued.
Mr Martin was speaking as Taoiseach Brian Cowen and the British Prime Minister Gordon Brown were holding a second day of talks in an attempt to save the executive.
Talks at Hillsborough Castle in Co Down broke up shortly before 3am today and resumed again a few hours later.
Mr Martin said, from what he has observed, he has seen "a constructive intent" on behalf of republicans and unionists.
"They wouldn't have been here so late last night if there wasn't a sense of purpose to reach agreement," he added.
Mr Martin said he was not in any way understating the difficulties ahead today.
"The situation is serious. The issues couldn't be more serious in terms of the future of the institutions," he said.
Mr Cowen and Mr Brown were leading negotiations with the DUP and Sinn Fein on the devolution of policing and justice powers.
The two prime ministers flew to Belfast last night after an eleventh hour bid to secure a compromise had failed. Fears mounted that Sinn Fein could collapse the institutions, forcing a snap Assembly election.
Mr Cowen and Mr Brown are attempting to patch up differences between DUP leader and First Minister Peter Robinson and the Sinn Fein Deputy First Minister Martin McGuinness.
The two governments held private meetings with DUP and Sinn Fein negotiating teams late last night.
Also in attendance were representatives of the Ulster Unionist Party, the SDLP and the Alliance Party.
Sinn Fein wants a firm devolution date for policing powers to be transferred from Westminster. But the DUP is insisting on concessions over the management of Orange Order parades before giving the go-ahead for the transfer. Nevertheless, the DUP indicated it is open to proposals on how to resolve the issue.
Sinn Fein minister Conor Murphy said: "We are here clearly to get a date for the transfer of powers on policing and justice. That has been our focus."
DUP minister Sammy Wilson expressed hope a deal could be secured but was critical of the way the situation had been handled. He said: "As far as we are concerned this is a contrived crisis, we don't need to be here tonight."