Westminster involvement in Northern Ireland's governance is now "inevitable" following the breakdown of power-sharing talks, according to a former Cabinet minister.
"In our view, there is no current prospect of these discussions leading to an Executive being formed", she said.
After a day in which Sinn Fein and the DUP met the visiting leaders, but not each other, both said that progress had been made.
She said it included an Irish Language Act, an Ulster Scots Act and a Respecting Language and Diversity Act.
"It is now incumbent upon Her Majesty's Government to set a budget and start making policy decisions about our schools, hospitals and infrastructure".
However, Sinn Fein's leader in Northern Ireland, Michelle O'Neill, said the two sides had reached an "accommodation" on this and other contentious questions but said the DUP failed to follow it through.
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The British government faces the prospect of having to step in and take previously devolved decisions in Northern Ireland.
We need a budget for the Northern Ireland authorities and, obviously, at the moment I'm afraid we're not going to get it through a re-establishment of the devolved executive.
In a statement yesterday, the DUP leader said that the restoration of power sharing at Stormont is "not possible at this time".
She said: "Sinn Fein engaged, we worked in good faith, we stretched ourselves".
"We advised the DUP leadership that the deal should be closed before those opposed to it could unpick what we had achieved", she said.
But Ms Villiers insisted the success of failure of negotiations ultimately depends on Northern Ireland's leaders and in particular its two largest parties, the DUP and Sinn Fein. "They have now collapsed this process", she said.
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The announcement will come as a major blow to the UK Government, after Theresa May and Irish premier Leo Varadkar visited Belfast on Monday to urge for a "final push" in talks.
âWill there be more talks?
"I very much regret the statement from the DUP".
It is 13 months since Northern Ireland's devolved government collapsed.
Direct rule would also mean, however, that the United Kingdom would administer Northern Ireland's abortion laws and the definition of marriage would transfer to Britain, putting Westminster in the "politically toxic" position of deciding whether to overturn the region's abortion ban and legalise same-sex marriage, The Spectator writes.
"Sinn Féin are now in contact with both governments and we will set out our considered position tomorrow".
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Three interpreters were on hand during the trial, which is expected to end on May 9. Eriksson said in January that his client had not expected to survive the attack.
Northern Ireland's power-sharing government has been suspended since January 2017, when it broke down amid a scandal over a botched green-energy project.