@user1220 said it - This is where you earn your value as a PM. You have the opportunity to turn a project around. Right now this project is on a fast track to zombie status - not quite living, not quite dead, but tough to kill. You have the opportunity to change that and to transform it into something that will look fantastic on your resume.
I think @Doug B's answer is very good. There are a couple of other thoughts I'd add. Effectively the client has imposed a constructive change - he has taken advantage of your missed milestone to completely destroy the project schedule without providing a replacement schedule. If I were in your shoes, I'd do the following:
1) Document the impact of the current change. Assume that your client won't respond on 1.2 in the near future. For the sake of argument, assume that you're stalled until 31 January. (It is a safe bet for my clients that December and January are wasted months with critical staff on leave). Revise your integrated master plan to show the effect of that delay. Prepare an estimate based on 1 month, 2 months and 3 months. Now you've got two options:
1a) I you want to keep the project alive, then propose that during the review period we alert key staff that this is a good time to take leave, spend time with families, etc. There is a lull in the project, but we expect it to restart in February.
1b) If you want to play hardball, identify your key staff. Revise your Integrated Master Plan based on the assumption that some fraction of these people will move to projects where (a) they have satisfying work to do and (b) the company isn't wasting their talent. Personally, I would begin to develop opportunities for these key staff.
I'd also do a series of simulations showing the effect of varying delays on the project. (in a similar situation in the past, I measured the slippage that resulted from customer failure to produce feedback, and then did a monte carlo simulation for all similar governance tasks. That allowed me to state that if stakeholder X continues to drag their feet, the schedule would have an X% chance of Y months of delay with a concommittant rise in total cost of $Z).
Include risks - if the project delays for 2 months, there is a 30% chance we'll lose key staff (what is the turnover rate for your company for those key staff? If your company doesn't have that calculated internally, you should be able to find it for similar companies/skill sets). Loss of key staff will delay project by X and raise cost by Y.
Calculate the point where it makes sense to kill the project. For example, if the client delays for 2.6 months, the project will no longer be profitable to the company.
Now present the data to the client and to your management. The carrot is that you have demonstrated that you're a better project manager than your predecessor, and that the probability of missed milestones has just dropped. The stick is that you have identified a point at which it would be sheer folly for your company to continue the project.
If you can turn this project around, your company, your client, and the key staff ought to recognize that you've done a great thing. Zombie projects smell foul, and that smell taints everyone involved.