The Irish and British governments were pressing late last night for an 11th-hour IRA rewrite of a statement of its future intentions, after dramatically rejecting yesterday's offer as ambiguously worded and inadequate.
As the Taoiseach and the British Prime Minister last night demanded complete "certainty" and "clarity" in relation to the "acts of completion" demanded of the parties including republicans, it emerged that they had abandoned yesterday's planned Hillsborough summit because of lack of clarity from the IRA.
In the last few days, it was learned last night, Mr Ahern and Mr Blair were shown the IRA's proposed statement to be issued in response to the two governments' proposals to restore devolution in the North.
The statement contained language which, in the words of one source, was "far from clear" in relation to stating that its war was over and in demonstrating this through substantial destruction of weapons.
After a series of contacts throughout Wednesday, the governments had hoped for an overnight revision of the IRA's planned statement, but none came.
Yesterday morning, Mr Ahern and Mr Blair agreed by phone that the proposed statement did not unambiguously commit the IRA to the required "acts of completion" and called off their meeting.
While Sinn Féin and the Ulster Unionists are unhappy with various aspects of the governments' proposals on policing, possible sanctions on parties deemed to be in breach of the Belfast Agreement and other matters, sources in all parties suggested the IRA issue was at the core of the difficulties.
Even the Sinn Féin president, Mr Gerry Adams, in an RTÉ interview last night, said: "The issues to be addressed fall outside the joint declaration."
He called on the governments to publish their proposals anyway.
"If you want a response from the IRA, how can you get it if the two governments won't authorise the publication of their declaration?"
However, the governments are determined to withhold publication of their plans until they are confident that the IRA response will be enough for Mr David Trimble to "sell" to his party and allow his return to the power-sharing executive.
Otherwise, they say they fear the republican movement will simply "pocket" as concessions the proposals in the document while not giving what is required in return.
The Taoiseach last night left open the prospect of a return to Hillsborough as early as today to clinch a deal on the restoration of devolution.
However, this depends on the outcome of last night's contacts and Government sources refused to speculate last night as to their level of optimism about this.
Before he left for a meeting in Downing Street in London with Mr Blair yesterday, Mr Ahern expressed confidence that the difficulty would be resolved.
While his and Mr Blair's later remarks in Downing Street pointed to the IRA position as the obstacle, Mr Ahern insisted he was not putting the blame on any party and that the current process could still be rescued.
"There are difficulties still to be resolved, we have time to resolve them. It is a time for people to keep just calm and cool and try to resolve them."
The IRA statement was to be issued within days of the publication of the governments' proposals on the future stability of the North's political institutions, policing, demilitarisation, the questions of "sanctions" on those deemed to be in breach of their obligations and other issues.
However, the intended statement which was shown to the governments in recent days fell significantly short of what both had hoped for.