The Northern Ireland secretary has said the consequences of not restoring Stormont are "too profound to consider".
Mr Smith was facing questions from MPs about efforts to kick-start devolution.
Some assembly members met at Stormont on Monday in a failed bid to stop changes to abortion laws, but the sitting lasted less than an hour.
Mr Smith also announced an assembly election has been pushed back until at least January.
The legal date for an assembly election to be called if no power-sharing government was formed at Stormont was Monday, but Parliament will now push it back to January 13.
Northern Ireland has been without a devolved government since January 2017 when the power-sharing parties - the DUP and Sinn Féin - split after a bitter row.
'An unacceptable position'
Mr Smith said he was "disappointed" parties had been unable to reach an agreement to get Stormont back up and running, but that the extension will have "no bearing" on his efforts to restore the executive.
He also clashed with Democratic Unionist Party (DUP) MPs in the House of Commons on Monday about the government's Brexit deal.
The government's relationship with the party has been strained since it decided to push ahead with its deal, despite DUP opposition claiming it would threaten the union.
On Monday, the DUP urged the Northern Ireland secretary to listen to unionist concerns - and seek changes to the consent mechanism in the plan.
Mr Smith defended the deal and said MPs needed to vote for it in order to allow the government to deal with other matters.
He acknowledged Monday's events in Stormont and discussed steps the government would take to implement impending law changes.
Same-sex marriage will become legal and abortion will be decriminalised at midnight in line with a law passed by MPs at Westminster in July.
In response to a question from the North Down MP Lady Hermon, Mr Smith also suggested he would review the issue of cutting assembly members' salaries further in the coming days, if a breakthrough to restore devolution doesn't happen.