Delegates at six-party talks in Beijing have held a second day of negotiations on North Korea's nuclear programme.
Expectations had been building ahead of the talks
They are discussing a draft agreement which reportedly calls on Pyongyang to shut down its nuclear facilities in the next two months, in exchange for aid.
US and North Korean delegates said some progress had been made but that more needed to be done.
South Korea, China, Japan, Russia and the US are hoping to persuade the North to give up its nuclear programme.
Speaking to reporters after the talks, chief US negotiator Christopher Hill said discussions were inching forward.
"I think we have managed to get through what we thought were tough issues but nothing is agreed until everything is agreed so we must be very cautious," AFP news agency quoted him as saying.
North Korean delegate Kim Kye-gwan echoed Mr Hill.
"There are still differences on a series of issues in the overall talks, so we will try to work them out," he said.
'A long day'
Chinese officials drafted their outline plan after Pyongyang agreed to take initial steps towards disarmament.
N KOREA NUCLEAR PROGRAMME
Believed to have 'handful' of nuclear weapons
But not thought to have any small enough to put in a missile
Could try dropping from plane, though world watching closely
The one-page plan reportedly involves calls for the shutting down of Pyongyang's plutonium-producing reactor at Yongbyon within two months and the return of international inspectors, in exchange for deliveries of fuel oil.
In return, the US and South Korea would provide oil and other aid within the same time-frame.
The BBC's James Reynolds, in Beijing, says the fact the six parties are considering a draft agreement will be seen by many as a step forward.
It is certainly a change from the last round of talks held in December, in which no progress was made at all, our correspondent says.
Part of the reason for the renewed optimism, after years of stop-start negotiations, is the progress made at recent talks between the US and North Korea in Berlin.
Washington is reportedly showing an increased willingness to sit down and discuss North Korea's demands to lift financial sanctions.
Meanwhile, North Korean officials recently told visiting US delegates that Pyongyang would take the first steps to disband its nuclear programme in return for 500,000 metric tons of fuel oil and other benefits.
Reports that the North is enduring a winter food crisis have emerged in recent weeks, a fact which is thought to have changed the dynamics in the run-up to the talks.