Talks chairman Dr Richard Haass has scrapped his plans to start round-table talks today after the DUP gave an emphatic no to his proposals, first disclosed in the Belfast Telegraph.
Instead he and his team will spend the time furiously drafting a new discussion document for the five Executive parties to study.
The postponement is the first slippage in Dr Haass's ambitious timetable of reaching agreement on the thorny issues of flags, parading and dealing with the past by the end of the week.
Only yesterday morning he said this was still achievable, but that was before a stormy bilateral meeting with the DUP.
The party told him that it could not recommend any single aspect of the draft to its supporters and warned that progress was impossible without its co-operation as the largest party.
"We spelt out our bottom line," Jeffrey Donaldson, one of the party's negotiators, confirmed.
Gerry Kelly also said that Sinn Fein had "a series of difficulties" with the proposals.
However, he urged parties to work for common ground.
"We're in this together, we have to come to a conclusion together, we're open for that," he said.
Dr Haass has promised the parties a fresh document on Wednesday evening or Thursday morning.
Most of the drafting will be done by Charles Landow, another aide.
Yesterday unionists pressed Dr Haass to amend a code of conduct on parading and to remove suggestions that parading bodies could be sued for damage or losses if they breached it.
It would be administered by a new "Public Events Facilitation" body which is likely to replace the Parades Commission.
Legal sources say that suing parading bodies was already a theoretical possibility, but had never been taken up.
It was proposed that the new parades structure, comprising an adjudication authority to rule on parades and an appeals body, would be run by the Department of Justice, not the Northern Ireland Office as at present.
There is less contention on a process for dealing with the past which pulls together the functions of the Historic Enquiries Team, the historic legacy role of the Police Ombudsman and Troubles-era coroners' inquests into a single body.
Bringing coroners' inquests into the structure was proposed by the Retired Police Officers Association.
Victims would also be able to opt into an Independent Commission for the Recovery of Information which would be able to gather information from perpetrators in statements which could not legally be used to prosecute anyone.
The thorniest issue is flag-flying on civic buildings.
However, it seems unlikely that Dr Haass will move far from his suggestion that flying the Union flag on 18 designated days should be the default position for our councils, though he may make provision for this to be changed only by a weighted majority.
Given the population balance in most councils, achieving a weighted majority would generally require cross-community support.
Dr Haass will be aware of the results of two opinion polls, one by LucidTalk in the Belfast Telegraph in September and a MORI poll published yesterday by the BBC, which backed up the Belfast Telegraph's findings. Both showed that designated days was the only option commanding the support of substantial numbers in both communities.
Support for it had gone up from 22.5% in September to 33% this month, with the most marked increase amongst Protestants (19% to 32%).
However, designated days would involve a climbdown from unionist demands that the flag should fly all-year round in Belfast.