The Government is set to postpone its commitment to fund 88km of motorway  that was set to  link Co Monaghan with Co Derry.

The proposed A5 dual-carriageway was to run from the border near Aughnacloy through Omagh and Strabane to Derry.

The work was to be funded by the Government and Northern Ireland's powersharing executive and was part of the St Andrew's Agreement in 2006.

Although the motorway runs through Northern Ireland, it is often used by citizens of the Republic and is an important part of the island's road network.

The expected cost is around £800m and the Government was due to provide 50% of this.

Up to now, the Fine Gael-led Government had remained behind the commitment of the previous administration that the Republic would pay its share.

The decision was made during the review of a range of major capital infrastructure commitments, including projects such as Metro North in Dublin.

NI Finance Minister Sammy Wilson said he was disappointed, but understood the Irish government's position.

"They couldn't give a commitment between now and 2016," he said.

"Our budget only runs to 2014-15 so there's no money coming within our own budget period.

"For this budget period the road cannot be financed and cannot be built."

Mr Wilson said that the executive's contribution to the A5 would now be spent elsewhere.

"We're looking at how we re-profile that and what we spend it on," he said.

"I suppose if you consider if it was spent on houses, hospitals and schools it'll have a far greater impact than the building of a road would have done.

'Deep blow'

First Minister Peter Robinson said the news was "deeply disappointing but not entirely unexpected" as the Republic was facing "severe financial restraints".

"At the same time, we have to recognise that this will be a deep blow to the construction industry, there will be people who were looking to that road as their means of employment for the next number of years," he said.

The SDLP MLA for West Tyrone Joe Byrne called the announcement a blow for the people and the economy of the west.

"This is a major national strategic transport project, particularly for Tyrone, Derry and Donegal," he said.

Sammy Wilson said he understood the Irish government's decision

The Sinn Fein MLA for the area Pat Doherty said his party would be seeking an urgent meeting with the Taoiseach, Enda Kenny.

"This project was the result of protracted negotiations and agreement between the governments and political parties at St Andrew's, and it is incumbent on the Irish government to fulfil its responsibility under that agreement," he said.

In May, the taoiseach publicly pledged to spend hundreds of millions of euro to build the stretch of motorway.

Speaking at a conference of the Institute for British-Irish studies in UCD, Mr Kenny said his government was committed to co-funding the project with the Northern Ireland Assembly because it would "significantly improve" access from the north-west to Dublin.

"I've travelled that road on many occasions and it does need to be developed. The previous government had committed to put money in there and we will honour that commitment," he said.

In September, the Republic's Department of Transport said  it had already spent £19m on the project.

The Government is set to postpone its commitment to fund 88km of motorway  that was set to  link Co Monaghan with Co Derry.

The proposed A5 dual-carriageway was to run from the border near Aughnacloy through Omagh and Strabane to Derry.

The work was to be funded by the Government and Northern Ireland's powersharing executive and was part of the St Andrew's Agreement in 2006.

Although the motorway runs through Northern Ireland, it is often used by citizens of the Republic and is an important part of the island's road network.

The expected cost is around £800m and the Government was due to provide 50% of this.

Up to now, the Fine Gael-led Government had remained behind the commitment of the previous administration that the Republic would pay its share.

The decision was made during the review of a range of major capital infrastructure commitments, including projects such as Metro North in Dublin.

NI Finance Minister Sammy Wilson said he was disappointed, but understood the Irish government's position.

"They couldn't give a commitment between now and 2016," he said.

"Our budget only runs to 2014-15 so there's no money coming within our own budget period.

"For this budget period the road cannot be financed and cannot be built."

Mr Wilson said that the executive's contribution to the A5 would now be spent elsewhere.

"We're looking at how we re-profile that and what we spend it on," he said.

"I suppose if you consider if it was spent on houses, hospitals and schools it'll have a far greater impact than the building of a road would have done.

'Deep blow'

First Minister Peter Robinson said the news was "deeply disappointing but not entirely unexpected" as the Republic was facing "severe financial restraints".

"At the same time, we have to recognise that this will be a deep blow to the construction industry, there will be people who were looking to that road as their means of employment for the next number of years," he said.

The SDLP MLA for West Tyrone Joe Byrne called the announcement a blow for the people and the economy of the west.

"This is a major national strategic transport project, particularly for Tyrone, Derry and Donegal," he said.

Sammy Wilson said he understood the Irish government's decision

The Sinn Fein MLA for the area Pat Doherty said his party would be seeking an urgent meeting with the Taoiseach, Enda Kenny.

"This project was the result of protracted negotiations and agreement between the governments and political parties at St Andrew's, and it is incumbent on the Irish government to fulfil its responsibility under that agreement," he said.

In May, the taoiseach publicly pledged to spend hundreds of millions of euro to build the stretch of motorway.

Speaking at a conference of the Institute for British-Irish studies in UCD, Mr Kenny said his government was committed to co-funding the project with the Northern Ireland Assembly because it would "significantly improve" access from the north-west to Dublin.

"I've travelled that road on many occasions and it does need to be developed. The previous government had committed to put money in there and we will honour that commitment," he said.

In September, the Republic's Department of Transport said  it had already spent £19m on the project.