The Northern Ireland Secretary of State said the government's £1.5bn financial package for Stormont is his "final offer" and gave executive parties until next Thursday to respond.
Sir Chris Bryant said there was "no more money" available and that the Northern Ireland Executive needed to agree on a budget.
He said he would have to consider "every eventuality" if the executive failed to reach an agreement, including the possibility of a budget being passed at Westminster, but wanted to "sit down and I'll be as cooperative as I possibly can".
However some parties have criticised the deadline, with the DUP's Diane Dodds describing it as "reckless".
Earlier this month, Bryant made an offer of a financial package worth about £1.5bn over the next three years, a rise from an initial proposal of £1.1bn.
But executive parties said it did not go far enough and have argued that significant gaps remain before they can agree to a deal that would allow them to set a budget.
Some six months have passed since the executive should have set a budget for this financial year.
Speaking to BBC Newsline, Sir Chris said he had given executive parties until noon next Thursday to come back to him with a plan for agreeing a budget for this year and the following two years.
"It's my final offer. It's a good offer," he said.
He added: "There is no more money. The financial situation in the UK government at the moment is very, very tight."
Asked whether he was prepared to introduce a budget at Westminster if the executive did not accept the offer, Sir Chris said: "I've got to look at every eventuality. Of course I have. I've got to be responsible about this."
He said he did not want to legislate for a budget and would prefer to work with executive parties to reach an agreement.
"If it's impossible to set a budget through the executive, then somebody else will have to do it for them," he said, adding that he was "not at that stage yet".
Sir Chris also said the executive would have to consider raising additional revenue, but that it was not his job to tell ministers how to do so.
He said he had not specifically raised the introduction of water charges with executive parties.
Infrastructure Minister Liz Kimmins said Northern Ireland had been"underfunded for over a decade".
The NI Fiscal Council has found that Scotland and Wales are currently funded above their levels of assessed need while NI is at or slightly below its assessed funding need.
Speaking to BBC's The View programme, the Sinn Féin minister said: "The people
