Police investigating the murder of black teenager Stephen Lawrence are reportedly close to cracking the case after monitoring two new suspects.

Several Sunday newspapers say two white youths named by witnesses as being at the bus stop in Eltham, south east London, on the night Stephen died are under 24-hour surveillance.

A Scotland Yard spokesman refused to confirm the reports but said: "Investigations into the murder do continue."

One of the new suspects is said to be a blond youth described by witnesses who saw a gang around Stephen and friend Duwayne Brooks.

The other is reported to have been named by an number of anonymous callers and witnesses.

Stephen Lawrence's murder has never been solved.

Three men - Neil Acourt, Gary Dobson and Luke Knight - were cleared of murder at the Old Bailey in 1996.

Legal proceedings against two other men, Jamie Acourt and David Norris, were dropped at an early stage.

John Grieve, the head of Scotland Yard's Racial and Violent Crimes Taskforce, reportedly said that while he did not want to get Stephen's parents' hopes up he was "confident" of making a breakthrough.

Stephen's parents, Neville and Doreen, are in the process of suing the Metropolitan Police for the suffering they have endured as a result of the bungled investigation into Stephen's death.

The Met are now trying to thwart the damages claim, after reports that a "generous" offer was turned down by the family.

On Saturday, the London force was accused by campaigners of having made little progress in tackling institutional racism in the ranks.

Last year's Macpherson report into the bungled investigation into Stephen's murder reached scathing conclusions about police racism.