The British Prime Minister is expected to agree to make a major gesture of demilitarisation in south Armagh if there is an overall deal to break the deadlock in the North.
Mr Blair and the Taoiseach, Mr Ahern, will talk by telephone this weekend amid renewed hope of a deal in the wake of the Clinton visit.
More detailed work will be done in the next week on the proposed demilitarisation gesture. However, the most likely British step - to be taken only in the context of an IRA commitment to begin real talks with the de Chastelain Commission - is agreement to dismantle the major British Army base on the GAA pitch in Crossmaglen.
The move would be highly significant as the base has become the most potent symbol of the conflict in the area for close to three decades. While this is seen as the most likely step, other options are understood to be still under consideration.
The agreement in principle comes after earlier reluctance to move in the face of British security advice. It follows Mr Blair's discussions with President Clinton in Belfast and London this week, during which President Clinton is understood to have pressed Mr Blair to consider such a step.
However, despite the impetus to the negotiations given by the Clinton visit, there is no sign of early agreement on police reform. A deal to get over the present impasse is not expected to include a final resolution of this issue.
The US visit hardened the shape of the specific deal now being devised with a view to seeking agreement from all sides. It involves four elements:
The removal by the British government of a notable element of its military presence in south Armagh;
The full re-engagement of the IRA with the de Chastelain commission;
The lifting by the First Minister Mr David Trimble of his ban on Sinn Fein ministers attending meetings of the North-South Ministerial Council;
The building of nationalist confidence in the process of police reform.
In an effort to persuade Mr Blair to go against security advice to retain the level of presence in south Armagh, Mr Ahern last week offered to step up Army Border patrols in north Co Louth if the British agree to move.
This would be done, according to sources, if the RUC Chief Constable and Garda Commissioner agree it would be a useful step.
This weekend's detailed talks between Mr Ahern and Mr Blair will begin an intensive final preChristmas round of negotiations. While there are some hopes of concluding a deal before Christmas, the participants accept that the process may continue into the new year.
Sources last night cautioned against expectations of an early resolution of differences over policing. Some issues of detail may be agreed in the current negotiations. But all sides appear to concede that nationalist confidence in police reform will grow only in the context of the political process being seen to work over a sustained period.
Talks are continuing, however, on plans to merge the police intelligence division with the special branch under the direct control of the new force; to phase out the full-time reserve; to phase in the part-time reserve; and on other matters of detail.