Reg Empey said: "I don't think the gap between us is that great.

"We see this as a package, not a one-off. Nothing is agreed until everything is agreed. There are no guarantees, but there is a possibility we can have an agreement before Christmas," he added.

Reg Empey: 'Deal by Christmas'

There are fears that the UK and Irish Governments will not be able to meet the legislative timetable for transfer of power from London to Belfast by next February unless a deal on cross-border institutions is agreed within the next fortnight.

Mr Empey denied SDLP and Sinn Fein accusations that unionists walked away from an agreement brokered by the Prime Minister, Tony Blair, at Stormont last week because of internal party pressures on their leader David Trimble, the Assembly's First Minister.

Mr Empey insisted no deal was concluded when Mr Blair ended his visit.

"We are taking other people's proposals seriously and trying to be accommodating and all we got was our heads kicked in," he said.

Most of the parties are pushing for the establishment of 10 ministerial departments at Stormont, but they have failed to settle on the number of cross-border bodies. The unionists want six and the SDLP eight.

Position papers are being drawn up identifying the contentious areas in preparation for new talks in Belfast.

However, significant progress is unlikely before Thursday when Mr Trimble goes to Oslo to receive the Nobel Peace Prize which he won jointly with SDLP leader John Trimble for their part in negotiating the Good Friday Agreement.

Even if there is a pre-Christmas agreement on departments and north-south implementation bodies, the deadlock on decommissioning weapons - which has delayed the setting up of an ruling executive - still remains.

Mr Trimble has warned that Sinn Fein cannot sit down with his side until the IRA begins to rid itself of arms and explosives.

Peace process 'not in a healthy state'

The Sinn Fein President Gerry Adams, who leaves for Washington on Monday admitted he was reluctant to cross the Atlantic because of the stalled process.

Gerry Adams: 'Unionists are on holiday'

"Any illusion that the peace process is in a healthy state or that there is a unity among the party leaders would not just be wrong, but counter productive," said Mr Adams.

"Most of the party leaders are serious about trying to implement the Agreement, but the Ulster Unionists are on holiday."

He added: "David Trimble has to know that the peace process is not just about picking up peace prizes."

Blair 'must be there' - Sinn Fein

Republicans believe only with Tony Blair at the table can an agreement be reached.

"He has to be there until the deal is struck, signed, sealed and delivered," said a Sinn Fein spokesman. "If Blair had not been here during Easter week we would not have got that [Good Friday] deal. He thought in good faith an agreement was reached at Stormont last week, but once we left the deal went with him, I'm afraid. We want this resolved before Christmas."

But Mr Empey, a former Belfast Lord Mayor and one of his party's assembly members, felt there was no need for Mr Blair to return to Belfast.