Peace talks between Nepal's government and Maoist rebels have adjourned amid hopes of a deal to end a decade of bloody insurgency.
The rebels' weapons have been a key area of difference
Reports from Kathmandu say agreement has been reached on one of the most contentious issues, that of what to do with the rebels' weapons.
Correspondents say differences also appear to be narrowing on another key issue - the future of the monarchy.
About 13,000 people have died in the rebels' struggle for a communist state.
'Lock and key'
The BBC's Charles Haviland in Kathmandu says there has not quite yet been the breakthrough many Nepalis hoped for, but emerging from six hours of talks on Monday, a senior politician said an agreement was imminent on the arms issue.
This particular matter has hampered the peace process, which started with a general ceasefire six months ago.
Prachanda says a major breakthrough is likely
Reports suggest the Maoists have, for the first time, agreed to be separated from their weapons once they are confined to seven camps before elections due next year, our correspondent says.
The rebels will keep the keys to their weapons, but the locks will be closely monitored by the United Nations and an alarm sounded if they are breached, the reports say.
The rebels' most senior leader, Prachanda, has said a similar arrangement will apply to the weapons of the government army.
Monday's meeting came after Prachanda held informal talks with Prime Minister GP Koirala on Sunday in the presence of a UN representative.
A UN team is in Nepal at the request of the two sides.
The prime minister and Prachanda have also reportedly agreed that the first meeting of the proposed constituent assembly will decide the fate of the monarchy.
Elections to the assembly are planned by June next year.
The two sides are also expected to announce an agreement on an interim constitution and an interim parliament to clear the way for an interim government, which would include the rebels.
Peace talks began after a popular uprising forced King Gyanendra to end his direct rule in April and appoint a multi-party government.
The rebels, who claim to have about 35,000 fighters, backed the protests and subsequently entered into talks with the new government.
Last month, the two sides held four rounds of talks but negotiations stalled on the issue of rebel disarmament and the monarchy's future.