The political situation in Northern Ireland was in turmoil Tuesday following the shock resignation of Martin McGuinness of the pro-unification Sinn Fein party.

The deputy leader has quit in a major rift with First Minister Arlene Foster of the Democratic Unionist Party (DUP).

McGuinness, who last month cancelled joining a scheduled trade mission to China because of illness, quit his job in a bitter row with Foster over a controversial renewable heating scheme.

The scheme was shut down to new applicants last year when it became clear it was open to serious abuse.

McGuinness had been calling on Foster to stand down so that an inquiry could take place, amid claims taxpayers could face paying a bill running into hundreds of millions of US dollars.

However, Foster said in a press conference in Belfast that a major sticking point had been the fact that Sinn Fein would not agree to the establishment of an enquiry into the heating scheme until she agreed to step aside as first minister.

"I felt to have done so would have led to the conclusion that I was guilty of something improper which is not the case," she said.

In the British House of Commons, the Northern Ireland Secretary James Brokenshire described the situation as grave, while fears were expressed it could lead to a period of direct rule from London for the once battle-torn region which borders onto the Irish Republic.

"The situation we face in Northern Ireland today is grave, and the government treats it with the utmost seriousness," he said.

Brokenshire warned the clock was now ticking and if there is no resolution it could threaten the continuity of the devolved institutions.

"We are currently in the longest period of unbroken devolved government (in Northern Ireland) since the 1960s. This political stability has been hard gained, and it should not be lightly thrown away," he said.

According to Brokenshire, under Northern Ireland's power-sharing agreement, the resignation of McGuinness automatically means Foster also ceases to hold office.

He told MPs in London that unless the two top posts are filled within seven days he will have to call an election for the devolved Northern Ireland Assembly.

Brokenshire said that as McGuinness had ruled out the nomination of a new deputy first minister by Sinn Fein, so an early assembly election looks highly likely.

Power sharing in the Northern Ireland Assembly came as part of a peace process that followed three decades of conflict over the status of the province.

Government officials in London and Dublin were Tuesday night involved in talks with political leaders in Northern Ireland in a final bid to avert a crisis.

Brokenshire said while the row over the hearing scheme might have been the catalyst for the situation, it had exposed a number of deeper tensions in the relationship between parties in the Northern Ireland Executive.