Talks involving the two governments and the North's political parties will begin on February 6th.
Taoiseach Bertie Ahern with Prime Minister Tony Blair give a press conference following their meeting at Farmleigh
The Taoiseach and the British Prime Minister made the announcement in Dublin today after a meeting in the State's official residence at Farmleigh.
The talks - which will be hosted by the Northern Secretary Peter Hain and Minister for Foreign Affairs Dermot Ahern at Stormont - are aimed at restoring the North's institutions before the end of the year.
In a joint statement, the two leaders said: "2006 is a decisive year for this process. On February 6th, talks will begin with the aim of setting out the arrangements and timetable for the restoration of the institutions, which, of course we want to see as soon as possible.
The statement went on: "We recognise, given the previous breakdown in confidence in the process, that this is an ambitious goal.
"The Independent Monitoring Commission (IMC) has a key role to play, and the governments look forward to receiving its next report in the coming days - as well as its further report in April."
The IMC's report is due to be handed over to both governments in the next few days.
The indications are that although the IMC report will be largely positive, it will not give a clean bill of health to the IRA.
The governments fear it will be seized on by unionists to justify refusing to engage in direct talks with Sinn Fein.
Speaking afterwards, Mr Ahern described his meeting with Mr Blair as very positive and focused.
But he warned: "This is not a time for sitting back or complacency. We cannot afford a prolonged stalemate."
Mr Ahern said next month's talks between the governments and the political parties would create a fresh momentum.
When asked what would happen if the IMC report indicated continued IRA activity, Mr Ahern said he hoped the Commission would report "no obvious breaches" from the pledge the IRA made last July to end its armed campaign.
Mr Blair admitted: "A state of paralysis is not a good place to be."
He said: "However benign or placid things may appear to be while the stalemate continues, underneath the surface there are currents of instability present when there is not a forceful direction to move the process forward."
The British leader said: "It would not be reasonable to say today that the institutions should be put back in place and unionists should go back into government with republicans".
"By the same token, it would not be reasonable either to say nothing has changed. Last July's statement and action from the IRA are hugely significant and important.
"My point is that it is far better to try to achieve those circumstances within some perspective at least that sees the institutions back up and running at a particular time," he said.
When asked about the DUP's recent proposal of a phased restoration of the institutions involving a long "decontamination period" for republicans, Mr Blair said: "I think the fact that the Democratic Unionists are putting forward proposals is a sign that they recognise that things cannot stay simply as they are."
