The Northern Ireland assembly will receive an additional £1 billion of investment, providing it can agree on a power sharing agreement by midnight on Monday.
Gordon Brown met with Northern Ireland leaders today to outline the additional funding the assembly can expect from London and Dublin.
Aside from the £35 billion already pledged to the new executive over the next four years, the chancellor announced devolved ministers will be granted a further £1 billion to invest in infrastructure, jobs and water charges.
However, the entire package is contingent on the DUP and Sinn Fein agreeing on power sharing arrangements.
The chancellor said: "This is an historic opportunity to move forward. I believe the Northern Ireland political parties are all serious about what can be done to achieve that.
"I believe that today, by making possible the resumption of the executive through having the resources that they need, the potential for creating the jobs that they can and helping look at some of the challenges they face, we can move this process forward."
The meeting with Peter Hain and the Northern Irish leaders had been a "very successful and constructive meeting", Mr Brown added.
Dr Ian Paisley, leader of the DUP, said the chancellor's offer was modest progress but further negotiations were needed before it could agree to share power with Sinn Fein.
Sinn Fein, the Ulster Unionists and SDLP agreed today's announcement was a "modest" improvement.
Additionally, the government has signed a retail consortium agreement with major companies, which could bring 5,000 jobs to the province. Sir David Varney, the former head of Inland Revenue, has also been appointed to review the different tax rates in Northern Ireland and the Irish Republic.
Prime minister Tony Blair met with the DUP yesterday to reiterate the importance of Monday's deadline, which Dr Paisley now understands, his official spokesman said.
He explained: "People have a choice. Either on Monday we will have ministers nominated and an executive meeting on Tuesday, or, the assembly will be dissolved."
If Dr Paisley does agree to serve as first minister with Sinn Fein's Martin McGuiness as deputy first minister, devolution will happen at 00:01 on Tuesday March 27th, leaving Mr Brown to sign off the additional funding.