Although no one was talking in terms of a breakthrough, a number of participants indicated that the "atmospherics" had improved significantly.
A series of meetings involving Tony Blair, his Irish counterpart Bertie Ahern, Sinn Fein and the Ulster Unionists were said to have made progress during the day. But under the deadline set by Mr Blair, the reported progress must become a firm deal by midnight tonight.
The Sinn Fein president, Gerry Adams, said the deadline could still be met: "I think we can get there. It's a matter of bringing the right political will. People out there don't want excuses as to why this cannot work. They want it to work. We cannot contemplate failure and we do not contemplate failure."
The scene is therefore set today for a day of intensive bargaining as the two prime ministers attempt to reconcile the Unionist and republican positions. The two men yesterday asked the international body on decommissioning, headed by the Canadian General John de Chastelain, to postpone delivery of what could be a key report on the attitude of the parties. It had been due yesterday.
Mr Blair declared: "People will neither understand nor forgive if we don't make this thing work. It is a moment of truth for Northern Ireland and let us hope that we choose the future, not the past. I don't think anyone can underestimate the formidable difficulties that we face. But we have been here before. We have done it before and we can do it again. I don't have any doubts about that at all."
Seamus Mallon, Deputy First Minister of the Northern Ireland Assembly, said he was hopeful of agreement between the parties. "I believe it is moving in that direction. I am reasonably hopeful that we will be able to make this work, that we will get there. It is the will of the people of Northern Ireland."
Unionists yesterday raised the question of the explosive material, apparently under the control of the IRA, which was seized last week by police in Co Donegal. Two men charged with possession of the material have been accepted into the IRA wing of Portlaoise prison in the Republic.
Sinn Fein's chief negotiator, Martin McGuinness, said too much was being read into events in Donegal, saying the IRA's ceasefire was "rock solid". Unionists in the talks seemed disinclined to elevate the issue into one which might hold up the negotiations.
The Rev Ian Paisley, leader of the Democratic Unionist Party, warned, however, that loyalists would reject any "shady deal" accepted by the Ulster Unionist Party which would put Sinn Fein into government. Later Mr Paisley claimed he had had a very positive response from Mr Blair to his plea that the controversial banned Drumcree parade be allowed to go ahead. The Prime Minister's official spokesman said that following the "responsible and mature response" of Orangemen in Portadown to the decision to ban part of the parade route, lines of communication would remain open to resolve the issue.
He did not rule out the possibility that a parade through the nationalist Garvaghy Road could take place later this year if agreed by all sides.
Meanwhile police searching for the graves of people murdered and secretly buried by the IRA found two sets of human remains. The site, in Colagh, Co Monaghan, is said to contain the bodies of John McClory, 17, and Brian McKinney 23.
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