The federal government is prepared to table back-to-work legislation Monday to end the Canadian National Railway strike if the two sides do not reach a deal by the start of the week.

The official, who declined to be identified, said Sunday night the government would prefer the locomotive engineers represented by the Teamsters Canada Rail Conference union and the company to negotiate.

But he said to protect the Canadian economy they could not let the strike, which began after talks broke down on Friday, to continue. 

The legislation would order an end to the strike and all outstanding issues would go to binding arbitration, he said.

The strike remained at a standstill Sunday with the two sides at loggerheads over whether to return to the bargaining table.

CN rejected the latest proposal by Teamsters Canada Rail Conference to get negotiations back on track.

Through federal mediators, the union offered late Saturday night to submit the wage portion of the dispute to binding arbitration upon the resolution of other outstanding issues.

But the company's communications director said the railway reviewed the offer and found it unreasonable.

"This proposal would not end the strike," said Mark Hallman. 

"Rather, it would continue the negotiations for an undefined period of time over the same work rules we've been discussing for 14 months."

Management is demanding the union submit all outstanding issues to binding arbitration, not just wage matters.

Union president Daniel Shewchuk said Sunday they were working to break the log jam without undermining collective bargaining rights.

"We're trying to get the company to negotiate with us on the balance of the issues," he said.

"We want to negotiate. We don't simply just want to say: 'This is it. We can't agree. Let's go to binding arbitration.' That doesn't solve anybody's problem and all it does is affect long-term labour relations."

Ignatieff wades in

Earlier Sunday, Liberal Leader Michael Ignatieff called on the federal government to get negotiations between CN Rail and its striking locomotive engineers back on track.

In a statement, Ignatieff said the Conservatives need to protect businesses and shippers who rely on the cross-country rail network from suffering economic losses.

Ignatieff said Canadians need a fully functioning transportation system, which means they need their government to get this dispute resolved.

Talks between the two sides broke down Friday and some 1,700 locomotive engineers are now on the picket lines.

The main issue appears to be CN's imposition of a raised mileage cap — the number of miles an engineer is required to work per month — which the union says could result in longer shifts for its members and layoffs.

CN says it will try to keep trains running by having supervisers and managers take over the engineers' duties during the strike.