MANCHESTER, England (Reuters) - A deal can be done by the end of October to restore Northern Ireland’s power-sharing government, Sinn Fein’s leader in the region said on Tuesday, raising a possible compromise with the Democratic Unionist Party (DUP).

Michelle O'Neill leader of Sinn Fein in Northern Ireland, attends a fringe event at the Conservative Party Conference in Manchester, Britain, October 3, 2017. REUTERS/Hannah McKay

Unless the two sides clinch an agreement, the British government will be forced to bypass the regional assembly and move toward direct rule from London, potentially destabilizing the delicate political balance in the British province.

Northern Ireland’s two largest parties have failed to reach agreement on reforming the devolved administration since its collapse in January and Britain’s minister for Northern Ireland has told them they are rapidly running out of time to do so.

“Throughout the Irish peace process we have been through very difficult times and we have been able to find a way forward,” Michelle O’Neill told Reuters on the sidelines of the Conservative Party Conference in the English city of Manchester.

“We are in intensive negotiations and we will continue to work our way through it. I believe it can be done but obviously we are into a crucial period in the next couple of weeks,” she said when asked if a deal could be done by the end of the month.

Irish nationalists Sinn Fein’s demand that improved rights for Irish language speakers must be introduced via a standalone piece of legislation remains the biggest impediment to reaching an agreement with the pro-British DUP.

However O’Neill said on Tuesday that legislation to promote the culture and language of Ulster Scots - a DUP demand - could be implemented side by side with an Irish Language Act, raising the prospect of the rival parties finding common ground.

“Let’s respect everybody’s identity: Let’s bring forward legislation for Ulster Scots alongside legislation for Irish language. They can be two pieces of legislation. Let’s look,” said O’Neill, who took over from Martin McGuinness shortly before his death this year.

DUP leader Arlene Foster, whose party also props up the Conservative government in the British parliament, told the same event that “solid progress” was being made in the talks.

While the restoration of the devolved government would give Northern Ireland a greater say in Brexit negotiations, the two parties that would lead it remain polarized on the issue.

O’Neill reiterated the need for Northern Ireland to be given special status in the EU to ensure the border to the south with EU-member Ireland remains open while Foster insisted that there could not be any barriers between the province and the rest of the United Kingdom.

“We should leave the customs union and we should leave the single market. You can’t be any clearer than that,” Foster said.