Peter Hain said NI was now in an end-game

It follows the shake-up of the cabinet by Prime Minister Tony Blair in the wake of Labour losses in council elections in England.

Mr Hain said he was delighted to be asked to stay on to finish the job and was "determined to make progress".

"We're now in the end-game. The parties face tough decisions when the assembly meets for the first time in three and a half years on May 15," he said.

"The MLAs will have until November to agree on a power sharing executive.

"This is a defining period for Northern Ireland and, as I have done for the past year, I'll be working flat out to get the positive outcome that the people want and deserve."

In Friday's cabinet reshuffle, Charles Clarke was sacked as home secretary.

The prime minister is trying to regain momentum after one of the worst local election results in Labour's history.

Mr Clarke will be replaced by Defence Secretary John Reid. Margaret Beckett is the new foreign secretary, with Jack Straw becoming Commons leader.

John Prescott will stay as deputy prime minister but lose his department. Trade Secretary Alan Johnson gets education.