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Ireland's Prime Minister Enda Kenny arrives at a European Union leaders summit in Brussels, Belgium, December 15, 2016. REUTERS/Francois Lenoir

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DUBLIN (Reuters) - Northern Ireland politicians could be given more time or face another election if rival parties cannot agree on a power-sharing arrangement by next week, Irish Prime Minister Enda Kenny said on Tuesday.

The province's main nationalist and unionist parties were given until March 27 to form a government following snap elections earlier this month, or risk decision-making taken back to London for the first time since 2007.

Kenny, whose government is co-guarantor with Britain of the two-decade old peace deal that ended three decades of violence and introduced devolved government by power-sharing, said he did not want a return of direct rule from Britain.

"If the latter (direct rule) is out, what are you left with - either 1) a functioning executive, 2) further elections or 3) some sort of further extension of time, so I do hope that the politicians come together," Kenny told Ireland's parliament.

Britain's Northern Irish minister James Brokenshire has also played down the idea of London taking charge. However he has not indicated that he would consider granting the parties more time before calling a third election in the space of a year.

The March 2 election saw Sinn Fein surge to within one seat of the Democratic Unionist Party (DUP) and deny pro-British unionist politicians a majority in the regional local assembly for the first time since Ireland was partitioned in 1921.

Among its demands for re-entering government, Sinn Fein insists they will not vote for DUP leader Arlene Foster as First Minister until the scandal that triggered the poll - a botched heating subsidies scheme she established - is cleared up.

Foster has resisted those calls, saying she is not prepared to step aside temporarily while a public inquiry that could take six to 12 months is held.

Sinn Fein's chief negotiators, party president Gerry Adams and its Northern Ireland leader Michelle O'Neill, spent Tuesday in Londonderry, and not Belfast where the talks were taking place, following the death of former leader Martin McGuinness.

(Reporting by Padraic Halpin; Editing by Tom Heneghan)

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