Theresa Villiers said there was a "thorough consideration" of some key elements of the Stormont House Agreement on Wednesday.
This included reform of the public sector to release resources for frontline public services.
The talks are to resume on Thursday.
"The Northern Ireland parties carried out a thorough consideration of some key elements of the Stormont House Agreement designed to make devolution work better," Ms Villiers said.
"We also continued our detailed discussion of finance and welfare issues, including reform of the public sector to release resources for frontline public services.
"The differences between the parties are still very significant on these issues, but I do sense a willingness to make progress.
"Tomorrow, we focus on the impact of paramilitary activity and legacy issues such as the new Stormont House Agreement institutions to help address the concerns of victims and survivors."
Meanwhile, Irish Foreign Affairs Minister Charlie Flanagan has addressed the Irish parliament about the political situation in Northern Ireland.
He said that "contrary to some recent reports, the institutions for dealing with the past set out in the Stormont House Agreement would not convey an amnesty" for those who had committed a crime.
"The new Historical Investigations Unit provides for police investigation and, where there is an evidential basis, the prospect of justice," he added.
"The Independent Commission for Information Retrieval, to be established by the two governments, is intended to allow individuals to seek information about Troubles related deaths where there is no realistic prospect of prosecution; information provided to the commission for this purpose would not be admissible in court.
"However, the Stormont House Agreement makes it clear that no individual who provides information to this body will be immune from prosecution for any crime committed should the required evidential test be satisfied by other means and this will be reflected in the agreement establishing the body."
The round-table talks between Northern Ireland's political parties are aimed at finding a resolution to the crisis at Stormont.
The political row was triggered by a police assessment that IRA members were involved in the murder of former IRA man Kevin McGuigan Sr last month.
Police said the IRA still existed, but added that it was not engaged in terrorism.
Analysis Mark Devenport BBC Northern Ireland political editor
There are different things that may bring this talks process to a conclusion.
One is that the financial clock continues to tick away under the Stormont Executive.
Another is that Peter Robinson stood down for a six-week period and, if there isn't some sort of revolving mechanism dreamt up by the DUP, that should be running out, I think it is 22 October.
So that might put a little bit of a back-stop to the talks.
Certainly, he wouldn't, I would have thought, want to come back into the job without having seen something from this panel which gives him cause for satisfaction.
Three Democratic Unionist Party (DUP) ministers subsequently resigned from Northern Ireland's ruling executive, and Peter Robinson, the party's leader, stepped aside as first minister.
The DUP and the Ulster Unionists agreed last week to join the round-table talks when the government ordered a review of paramilitary groups in Northern Ireland.
On Tuesday, the government announced the names of the panel members who will oversee the independent assessment.
Ms Villiers said that after two days of negotiations there was an acceptance across the board that the issues of finance and welfare reform had to be resolved.

And the National Trust, which holds one of the world's biggest collections, has started cataloguing every scrap in its collection.
Members have been meeting at the trust's Erddig Hall, Wrexham, where there is already an extensive collection with the oldest dated to the early 1700s.
"We care for paper in all sorts of contexts," said Joanne Hodgson, assistant house steward at Erddig.
"It's on walls, ceilings, inside boxes and cupboards, fragments that have been found behind water pipes and skirting boards, and even a miniature collection in our dolls' house.
"We also have one of the oldest exactly dated wallpapers at Erddig date stamped 1714."
The wallpaper working group is trying to decide how best to catalogue its wallpaper given most of its examples remain in situ.
Erddig's grand rooms are lined with early examples of wallpaper from China, inventors of the fashion for wall lining 2,000 years ago and which was later taken on by the French.
But it is below the stairs, in the servants' quarters, where there are equally impressive examples, even though these were considered "cheap" examples from the 19th and 20th Century.
The Northern Ireland Secretary has said she senses a willingness among the political parties to make progress despite significant differences on finance and welfare reform issues.
[NEXT_CONCEPT]
Whether it is wood chip or William Morris, there are many forms of wallpaper.