The Northern Ireland secretary has said he will introduce new legislation to address the political deadlock after the latest deadline to restore Stormont passed.

Chris Heaton-Harris said his legislation will support Northern Ireland departments to manage “the immediate and evident challenges they face in stabilising public services and finances”.

The power-sharing Stormont Assembly has been collapsed for almost two years while the Democratic Unionist Party (DUP) refuses to participate until their concerns over post-Brexit trading arrangements have been addressed by the UK government.

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Senior civil servants are running government departments with limited powers in the absence of local ministers.

Sir Jeffrey Donaldson’s party maintained their position during a final failed attempt to recall the Assembly following a motion by Sinn Fein on Wednesday.

Mr Heaton-Harris had been under an obligation to call a fresh election if the institutions were not restored by the latest legal deadline of 18 January.

However, minutes after midnight he issued a statement signalling that he intends to introduce new legislation to avoid this scenario.

The cabinet minister said he was “disappointed”, adding recent events have shown the need for a functioning government “to address a whole range of issues facing Northern Ireland”.

Thursday saw more than 150,000 public sector workers in the region take part in the biggest strike in recent history in a demand for the pay uplifts given to their colleagues in the rest of the UK.

Although the Westminster government offered a financial package worth more than £3bn – including money to make the outstanding pay awards – to Northern Ireland, it will not be made available until Stormont returns.

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Mr Heaton-Harris said: “I remain of the belief that a sitting Northern Ireland Executive is best placed to act quickly and effectively to resolve those issues.

“In the absence of a sitting Northern Ireland Executive I will update parliament on the next steps.

“I intend to introduce new legislation which will take a pragmatic, appropriate and limited approach to addressing the Executive Formation period and support Northern Ireland departments to manage the immediate and evident challenges they face in stabilising public services and finances.”

Northern Ireland’s devolved administration collapsed in February 2022 after the DUP withdrew in protest against post-Brexit trade checks between the region and Great Britain.

It believes the arrangements under the Northern Ireland Protocol diminish the region’s place within the UK.

Last year, Rishi Sunak struck a new deal with the EU known as the Windsor Framework aimed at addressing the concerns.

But the DUP said this did not go far enough and has been seeking further changes.