BBC Northern Ireland correspondent Tom Coulter: Agreement could be close

He said the final details were still being worked out, but an announcement could be made later on Thursday.

"I hope we have managed to crack what has proven to be a rather obstinate obstacle," he said.

"We have been making progress inch by inch and on that basis we got a few inches last night. We haven't sorted it all out, there are many things to be done."

Ireland Correspondent Denis Murray: "Great deal of activity but no visible results"

But his deputy in the Ulster Unionist Party, John Taylor, warned that agreement could be delayed by last-minute horse-trading "possibly for the next few weeks".

David Trimble will meet Gerry Adams later on Thursday

Mr Trimble also warned of more problems over the decommissioning of weapons.

He will meet Sinn Fein President Gerry Adams later to press him on the issue.

"I hope Mr Adams has something constructive to say," Mr Trimble said.

Talks are continuing at Stormont after Prime Minister Tony Blair's short visit on Wednesday helped the parties towards a breakthrough.

After seven hours of talks with Mr Blair the sides have almost agreed the creation of 10 departments at Stormont and for several cross-border institutions.

Under the plans being finalised, Sinn Fein would be entitled to two ministers in the new executive.

In return the SDLP and Sinn Fein are understood to have agreed to drop their demand for inward investment to be dealt with on a cross-border basis.

'Great deal of progress'

The Irish Prime Minister Bertie Ahern earlier said a "great deal of progress" had been made in efforts to advance the Good Friday Agreement.

But, speaking in the Dublin Parliament, he cautioned: "There are still several difficulties that have to be wrapped up."

This was Tony Blair's 10th trip to the province this year

Mr Ahern is ready to go to Belfast as soon as agreement is reached.

First Deputy Minister Seamus Mallon has also offered hope of progress from the meetings.

"I think in terms of the overall situation it is a very significant advance," he said. "What has been agreed is very substantial indeed."

If the deal goes through it will put intensified pressure on the IRA to begin decommissioning of weapons - the last major hurdle towards the establishment of a fully-functioning assembly with devolved powers next spring.

The Good Friday Agreement - the historic peace accord signed in April - specified that convicted members of truce-observing armed groups, responsible for the bulk of more than 3,400 killings in Northern Ireland's conflict, should be paroled by May 2000.