A deal that brings about power-sharing between the DUP and Sinn Fein will be achieved in 2007, DUP MP Jeffrey Donaldson has said.
Mr Donaldson said he was optimistic agreement would be reached
Mr Donaldson said he was optimistic agreement would be reached on policing and a power-sharing executive would be established at Stormont.
Sinn Fein members are to meet next week to discuss whether to move forward with a special conference on policing.
Republicans are concerned about "a lack of a positive response from the DUP".
On Friday, Secretary of State Peter Hain said Northern Ireland's political impasse could be overcome if Sinn Fein "delivered on policing".
Mr Hain said there was "every prospect" that the devolution of policing would be on track by May 2008.
Mr Donaldson, the Lagan Valley MP, told Irish state broadcaster RTE that he was optimistic an agreement would be reached.
"I think it will happen in 2007. I would be fairly optimistic about that and clearly there are difficulties at the moment. The sooner we can get to that point the sooner we will all be able to move on," he said.
"There is a huge agenda in Northern Ireland to address at a socio-economic level, there is so much that we can work on here and indeed work together on and lets get down to that job."
Sinn Fein's Martin McGuinness said a positive response from the DUP would clearly move the current situation forward.
"Sinn Fein has continually demonstrated our willingness to stretch ourselves and take risks in order to make this process work," he said.
"We want the process to move forward, we want to share power with the DUP, we want to see the issue of policing resolved. But others have responsibilities they need to meet."
Sinn Fein President Gerry Adams is expected to meet NIO minister Paul Goggins at Stormont Castle on Monday, while Secretary of State Peter Hain will hold talks with Irish Foreign Affairs Minister Dermot Ahern.
On Thursday, Tony Blair warned the DUP and Sinn Fein that commitments on policing and power-sharing must be honoured for an election to happen.
DUP leader Ian Paisley has said his party is willing to make progress but that "upfront delivery is required from Sinn Fein" on policing.
Mr Blair warned that commitments must be honoured
However, DUP MEP Jim Allister said on Friday he could not foresee a time when policing and justice could be devolved to an assembly.
Sinn Fein's leadership voted last month to hold a conference on the issue of whether to support policing.
But the party signalled on Wednesday this was in doubt because the move had not received a "positive enough" response from DUP leader Ian Paisley.
If Sinn Fein's conference does not go ahead, the March assembly election may be in doubt.
Meanwhile, Taoiseach Bertie Ahern has said his party would not have any difficulties accepting support from Sinn Fein if it was required after the upcoming Irish election.
However, he said Fianna Fail would not enter into a coalition pact with the party.
"I think the stigma that was on Sinn Fein that they resented very much was because they had not declared the cessation totally and clearly of the IRA, they did that in 2005, they honoured that in 2005, I think they must be given credit for that," Mr Ahern said.