Northern Ireland's main political parties have failed to reach an agreement after marathon overnight talks led by US diplomat Richard Haass.
Dr Haass said all parties supported aspects of a proposed agreement on how to deal with flags, disputed parades and the legacy of the Troubles, but a number of concerns remained.
The next step, he said, would be to form a working group made up of representatives from the five parties which would aim to build on the "significant progress" that had already been achieved.
There was a chance that all the parties would back all or key parts of his proposals in the future, he added.
Sinn Fein President Gerry Adams says an agreement has not been reached Dr Haass said: "The choice is not between the text and some ideal.
"Rather it is the choice between going forward with an agreement of this sort which necessarily represents some compromise, and the status quo."
Sinn Fein President Gerry Adams indicated his party was ready to strike a full deal, and urged all those involved "to reflect upon the process" - but he said the talks could not continue forever.
The DUP and Ulster Unionists both indicated they had major difficulties with elements of the text.
Ulster Unionist negotiator Jeffrey Donaldson MP said his team "profoundly disapprove" of some of the report's language.
The Social Democratic and Labour Party (SDLP) said it would also be conducting a consultation, but party leader Alasdair McDonnell said he would be recommending a general endorsement of the proposals.
Alliance party deputy leader Naomi Long said she was willing to endorse proposals on the past, but not on flags and parades.
Northern Ireland Secretary Theresa Villiers said: "It is disappointing that it has not been possible to reach a comprehensive agreement on flags, parading and the past within the timetable set out by Dr Haass and his team.
"Yet this should not be seen as the end of the road in seeking to find a way forward on these difficult and divisive issues.
"The Haass process has seen much valuable work done involving the political parties along with groups and individuals from across the community. Significant progress has been made. It is important to build on this and continue to seek agreement in areas that continue to be a focus for tension and division within society."
Dr Haass and his vice-chair Professor Meghan O'Sullivan - America's former deputy national security advisor on Iraq and Afghanistan - returned to Belfast on Saturday.
The talks were suspended in the early hours of Christmas Eve, but Dr Haass said the proposals on the table were "extraordinarily close" to gaining support.
He had set a deadline of noon on Monday for a deal to be reached.
Northern Ireland's First Minister Peter Robinson and Deputy First Minister Martin McGuinness invited Dr Haass after weeks of unrest over flags and marches.
There were serious disturbances last December and January when Belfast City Council voted to limit the number of days the Union flag is flown on City Hall.
Rioting flared during the summer marching season too when the Parades Commission prohibited an Orange Order return march at Ardoyne in north Belfast.
Agreement on when flags should be flown has proven most elusive and the parties may decide to defer that issue to another process after the next election.
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