Theresa May is facing a political crisis in Northern Ireland after the Democratic Unionist Party said that power-sharing talks had collapsed and suggested a form of direct rule should be introduced once again.

The DUP, which props up the Conservative government in Westminster, refused to agree to Sinn Fein demands to introduce legal protections for the Irish language, and said there was “no prospect” of a deal.

The crisis threatens to throw the Good Friday agreement into jeopardy and is a significant blow to Mrs May’s authority as she attempts to agree to a crucial Brexit deal over the Irish border.

It comes just 48 hours after the Prime Minister raised hopes of a breakthrough during a visit to Northern Ireland after a meeting with Arlene Foster, the DUP leader.

In a dramatic statement Ms Foster raised the prospect of a return to direct rule, saying it was now up to London “to set a budget and start making policy decisions about our schools, hospitals and infrastructure”.

The DUP’s lead negotiator said that Mrs May’s sudden visit to Northern Ireland on Monday to meet the parties had been a “distraction” in the attempts to get talks going and suggested she should not have made the trip.