Northern Ireland Secretary Chris Heaton-Harris has promised that an Assembly election will take place in the first three months of 2023 if the impasse at Stormont remains unresolved.

The UK government announced on Wednesday it intended to extend the deadline for calling a fresh election in Northern Ireland and cut the pay of Stormont Assembly members while there is no return to devolved government.

Making a statement in the House of Commons, Mr Heaton-Harris said he will introduce legislation to “provide a short straightforward extension to the period for executive formation”.

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The deadline for Northern Ireland parties to form a fresh power sharing executive ran out on 28 October.

The current law stated Mr Heaton-Harris was obliged to call a fresh election within 12 weeks of the deadline passing – which would be 19 January.

Mr Heaton-Harris told MPs he was now extending the deadline for parties to form an executive by six weeks to 8 December, with the option of a further six-week extension.

The 12-week clock for calling an election will now come into effect either on 8 December – meaning an election would have to be held by March – or six weeks later on 19 January, meaning a poll would need to be held by April at the latest.

The Northern Ireland secretary told Sky News on Thursday there would be an election in the first three months of next year if the stalemate remains unresolved.

“I’ve given myself two periods of six weeks…that simply means the first three months of next year,” he told Kay Burley.

Probed on whether he is positive that an election will take place in the first three months of next year if needs be, Mr Heaton-Harris replied: “Yes.”

The Northern Ireland secretary added the issues arising from the protocol will be solved by “negotiations” and by “showing trust and respect with the European Commission”.

A Democratic Unionist Party (DUP) boycott of the devolved institutions, in protest at Brexit’s Northern Ireland Protocol (NIP), has prevented an administration being formed since the May election earlier this year.

The protocol was aimed at avoiding a hard border with Ireland but has created economic barriers on the movement of goods between Great Britain and Northern Ireland, causing resentment and anger among many unionists and loyalists.

Announcing the proposed deadline extension on Wednesday, Mr Heaton-Harris said it “aims to create the time and space needed for talks between the UK and EU to develop and for the Northern Ireland parties to work together to restore the devolved institutions as soon as possible”.

The Northern Ireland secretary did not say by how much he is proposing to reduce pay for members of the Legislative Assembly (MLA) while Stormont remains effectively mothballed.

Mr Heaton-Harris also confirmed he will give extra powers to Stormont civil servants to enable them to run the region’s public services as the impasse continues.

The proposals will require legislation to be passed at Westminster to be enacted.

The DUP has refused to return to Stormont until decisive action is taken over the treaty.

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Responding to the Northern Ireland secretary’s announcement, DUP MLA Edwin Poots said the UK government must recognise that until the protocol is replaced with arrangements that unionists can support there will be no basis to restore devolution in Northern Ireland.

“Our opposition to the protocol is not dependent on salaries. The sooner the government deals with the protocol, the sooner Stormont can be restored,” he said.

While in the Commons, DUP leader Sir Jeffrey Donaldson told Mr Heaton-Harris that while courage, understanding, and compromise are “good words”, what is needed is “a solution that sees the institutions restored on the basis that Northern Ireland is an integral part of the United Kingdom”.

Ireland’s foreign minister Simon Coveney welcomed the decision saying it allows further space for progress in the EU-UK talks.

“I urge the UK authorities to make use of this renewed opportunity to engage positively, and with real urgency, in the knowledge that the European Commission has listened carefully to the concerns of people across Northern Ireland, including and especially unionists,” he said in a statement.

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But Sinn Fein vice-president Michelle O’Neill said the uncertainty over an election was not good enough.

“What we now have are new deadlines, multiple deadlines, in which he may or may not call an election,” she told reporters at Stormont.

“So this is not a good enough space for people to be in and I think the fundamental question today has to be around what’s next?

“What do the British government intend to do to find an agreed way forward on the protocol?”

Ms O’Neill also questioned why Mr Heaton-Harris had not targeted the pay cut at DUP MLAs who were refusing to engage with the devolved institutions.

Social Democratic and Labour Party (SDLP) leader Colum Eastwood welcomed the move to cut MLA pay, saying the DUP “have no justifiable reason for hanging about while people’s homes get colder and their cupboards get emptier”.

While Alliance Party leader Naomi Long welcomed “clarity” from the Northern Ireland secretary, but added: “However, the overall picture has not changed. As long as any one party can take the institutions hostage, they will.”

The Northern Ireland secretary confirmed last week that a Stormont election will not be held in December, saying he had listened to “sincere concerns” across the region about the impact and cost of a fresh poll at this time.

The UK government has vowed to secure changes to the agreement, either by way of a negotiated compromise with the EU or through proposed domestic legislation which would enable ministers to scrap the arrangements without the approval of Brussels.

Opponents have likened the Northern Ireland Protocol Bill to “placing a gun on the table” at talks with the EU aimed at finding a solution, arguing it breaks international law as well as risking a trade war.