The Secretary of State for Culture, Media and Sport came under renewed pressure over the Wembley proposals, and he confirmed that Twickenham, the home of English rugby, was being considered as an alternative venue for future athletics competitions.
Mr Smith, who will announce details of the project's future later this week, said "very detailed work" had been underway since the original plans were rejected on 1 December.
"Although many of the issues have been resolved, concerns remain about the quality of the sightlines, the cost and time involved in reconfiguring the stadium for athletics and the long term value for money involved.
"All parties are now working closely together towards finding the best possible solution both for football and for international athletics," he told MPs during question time.
But Peter Ainsworth, the shadow Culture, Media and Sport Secretary, warned that Mr Smith's "dithering" had jeopardised England's 2006 World Cup bid. "In the light of the almost unbelievable shambles surrounding this project what assessment have you made of your own credibility as Secretary of State?
"Every day that goes past represents another blow to our bids for the World Cup, the World Athletics Championships and a future Olympic games."
The original design for the new National Stadium was deemed unsuitable to host the Olympics. The design was also thought unlikely to provide an appropriate home for the World Athletics Championships which Britain hoped to host in 2005.
Mr Smith added: "Twickenham is indeed a potential option which is being considered as an alternative venue for international athletics.