Stormont Assembly members' pay will be reduced by more than £13,000 as they are not performing all their functions, Secretary of State Karen Bradley said.
The announcement comes a week after protests were held all across Northern Ireland as part of the We Deserve Better campaign started by Dylan Quinn with over 1,000 people attending the rally in Enniskillen which called for a cut in MLA salaries if they did not return to government.
Northern Ireland's devolved legislature in Belfast has not sat since early last year in a row over identity issues like the Irish language, which has prevented the appointment of ministers.
Mrs Bradley told Parliament: "While Assembly members continue to perform valuable constituency functions, it is clear that during any such interim period they will not be performing the full range of their legislative functions.
"So, in parallel, I will take the steps necessary to reduce Assembly members' salaries in line with the recommendations made by Trevor Reaney.
"The reduction will take effect in two stages, commencing in November - it would not reduce the allowance for staff as I do not think that MLAs' [Members of the Legislative Assembly] staff should suffer because of the politicians' failure to form an Executive."
Mrs Bradley's predecessor as Northern Ireland secretary, James Brokenshire, commissioned former Assembly chief executive Mr Reaney to examine the controversial issue of paying Assembly members.
He recommended the 27.5% cut, a move that would take the standard salary rate of £49,500 down to £35,888 in two stages.
Public services have suffered because no ministers are in place to make major decisions.
Controversial issues like provision of abortion cannot be addressed in the absence of an Assembly.
In explaining the need for a "stepped approach", Mr Reaney said the impact of any salary reduction on MLAs' personal circumstances has been acknowledged.
Mr Reaney added that research shows Assembly members spend 50% to 60% of their time on constituency work.
The average working week exceeds 50 hours, and sometimes up to 80 hours he added.
The Secretary of State also spoke about the decision making by civil servants in the absence of an Executive telling MPs: "I recognise that there is a need to provide reassurance and clarity to both the Northern Ireland Civil Service and the people of Northern Ireland on the mechanisms for the continued delivery of public services.
"So, the legislation I intend to introduce after the conference recess will also include provisions to give greater clarity and certainty to enable Northern Ireland departments to continue to take decisions in Northern Ireland in the public interest and to ensure the continued delivery of public services."
The Secretary of State also ruled out calling an election saying it would not be helpful "during this time of significant change and political uncertainty" or "would increase the prospects of restoring the Executive."