Counting is continuing in Northern Ireland today, with all sides waiting to see whether the DUP will emerge as the largest party in the assembly.

By mid-afternoon the Democratic Unionist Party had taken 26 seats, compared to 24 for David Trimble's Ulster Unionists.

Sinn Fein had surpassed the SDLP, taking 22 seats compared to 12 for Mark Durkan's nationalists.

With Rev Ian Paisley's anti-Good Friday agreement party on the brink of becoming the largest group in the assembly and Gerry Adams' republicans also strengthened, the results could prove a major setback for peace hopes.

Talks on re-establishing the power-sharing executive are expected to resume shortly, but the DUP has already hailed the results as a "nail in the coffin" of the agreement.

Among the key results, Adams won comfortably in his Belfast West constituency on Thursday, while the DUP secured seats for the Rev Paisley and his son Ian junior.

"We are going to have a proper negotiation for a new agreement that will enable the democrats, and the democrats only, to buy into something that is stable," said Rev Paisley.

"Today there has been a nail hammered very hard into the coffin of the Belfast agreement," added Paisley Junior.

The results came as key players, including Tony Blair and Irish prime minister Bertie Ahern, gathered for a British-Irish Council meeting taking place in Wales today.

The meeting was expected to include talks on enhancing the role of the inter-governmental forum, looking at further areas for enhanced cooperation.

Adams said the result vindicated his party's stance.

"We asked people to endorse the risks we were taking for the peace process, we stood on our record in the assembly and the executive," he said after topping the poll in his seat.

During an otherwise difficult election, the Ulster Unionists also received a welcome eight per cent boost in votes for Michael McGimspey in South Belfast.

Rebel unionist Jeffrey Donaldson was returned in Lagan Valley but warned that his party would be "in real trouble" at the next general election unless it changed its stance.

Even once the votes are counted it is unlikely that there will be a rapid resumption of devolved government.

Signs that both sides of the sectarian divide are sliding to the extremes could push the prospect of a settlement even further from the government's grasp.

Under the rules the Stormont assembly has six weeks to name a first and deputy first minister before new elections are triggered.

Alternatively the UK government may re-suspend the assembly to buy more time for negotiations.

The election comes at a critical time in the peace process following rows over IRA decommissioning and a failure to reach agreement on so-called normalisation issues.