Talks continued late last night at Stormont as parties tried to break the deadlock over the creation of North-South bodies and Assembly ministerial departments.
No agreement was achieved but a spokesman for Mr David Trimble said it was hoped that the impasse would be resolved before Christmas, and possibly by the end of this week.
Meanwhile in Dublin there were signs of growing optimism in Government circles about a breakthrough. Government officials travelled to Belfast yesterday for a fresh round of negotiations, with particular emphasis being placed on the proposed North-South Implementation Bodies.
Sources last night said "a businesslike air" appeared to be developing in meetings between the SDLP and the UUP and the Taoiseach, Mr Ahern, was "on standby" to go to Belfast later in the week.
The main unresolved issue concerned the number of implementation bodies that should be established. Unionists were insisting that six was sufficient at this point, with the nationalist parties arguing for eight.
In the North, Sinn Fein and the Progressive Unionist Party warned of a possible impending crisis in the political process but the UUP and the SDLP spoke of progress and an easing of tension.
The British and Irish governments have been maintaining pressure on the parties to agree before Christmas. A series of papers was drawn up yesterday offering possible ways out of the current logjam.
The North's First Minister, Mr Trimble, and Deputy First Minister, Mr Seamus Mallon, whose relationship has been strained after the failure of Mr Tony Blair's effort to find agreement less than a fortnight ago, met a number of times yesterday. Mr John Hume was also in attendance. The UUP deputy leader, Mr John Taylor, said yesterday the prospects of agreeing new departments and North-South structures were "50-50". By last night he had revised that figure to a more optimistic "60 per cent".
An SDLP spokesman agreed a deal was still possible this week.
Later last night Mr Trimble saw the Sinn Fein president, Mr Gerry Adams, for a 10-minute meeting. No progress was made on decommissioning, a spokesman said.
Mr Taylor earlier insisted that Sinn Fein could take up ministerial positions only after the IRA had begun disarming. "If Sinn Fein/IRA want to get involved in the political process, if they want the right to serve in the Northern Ireland executive, the ball is now in their court," he added.
Mr Martin McGuinness, Sinn Fein's senior negotiator, however, accused the UUP of being controlled by the "Paisleyite rejectionists". He said he did not want to concentrate on a "doom and gloom agenda". He wanted a positive approach but that must involve unionism fully implementing the Belfast Agreement.
Mr McGuinness made it clear that as far as he was concerned, IRA decommissioning was not a precondition to Sinn Fein's entry to an executive.
"The IRA have absolutely nothing to do with this. The IRA was not involved in signing up to the Good Friday agreement - I was, Gerry Adams was, David Trimble was. We all gave our word and we all gave our word to implement that agreement as a matter of urgency," he added.
Mr Adams, after his talks with Mr Trimble, said that with proper determination, agreement could be speedily achieved. "With the political will this could be sorted out in five minutes," he said.