The negotiations went on into the early hours. Although some of the exact terms are not known, it is understood to offer a Republican commitment to total IRA disarmament by May of next year, provided that the formation of a new executive body took place immediately.
According to reliable sources Sinn Fein has offered a "credible and certifiable" process of decommissioning. This would take place in a number of stages, with fail-safe mechanisms put in place to ensure each phase was completed as promised.
Early this morning Ulster Unionist leader David Trimble was said to be asking for an IRA, as opposed to Sinn Fein, endorsement of these terms, and arguing that under any such deal a fully-functioning executive would not immediately be formed.
During the evening it was announced that the long-awaited report on decommissioning, by the Canadian General John de Chastelain, was expected to be delivered to the parties at midnight. The midnight deadline passed without signs of a deal or confirmation that the report had been delivered.
It was also learnt that the Sinn Fein president, Gerry Adams, had taken the unprecedented step of asking to address all 30 members of the Ulster Unionist assembly team.
Mr Trimble was said to have indicated in the talks that he could live with only a two-week delay in arms decommissioning and not the six months offer. Mr Trimble was also reported to be holding out for firmer guarantees of sanctions against the republicans, including their expulsion from a new executive if the promises they made were not met. The offer from Sinn Fein apparently took the Unionists by surprise and delighted both the British and Irish governments, with Dublin sources describing it as a historic development on the part of the republican movement.
The IRA and Sinn Fein have for years expressed almost absolute opposition to decommissioning, which means that the proffered deal represents a radical repositioning for the republicans.
Last night Mr Trimble appeared to be in the business of firming up the offer and of stitching in a number of guaranteed penalties in the event of its non-delivery.
One source inside the talks said: "We are in the realms of certainty and sanctions."
Mr Blair and his Irish counterpart, Bertie Ahern, had been locked in talks all day as they sought a compromise to reconcile the positions of the two sides.
The see-sawing fortunes of the negotiation were described by the Secretary of State for Northern Ireland, Mo Mowlam, who told the Commons during the afternoon: "At lunchtime we were feeling positive. By the time I left to come here an hour later, people were getting worried again. It goes up and down."
Mr Trimble had emerged from the talks just before 11pm last night to speak to reporters. He said he had received no "concrete proposals" from other parties on breaking the deadlock over arms disarmament. He said Sinn Fein had not offered anything which allowed for progress to be made.
He said that while there were press reports about decommissioning proposals and timetables he had been offered "no such precise undertaking". Suggestions that a executive could be formed and decommissioning start three to six months later were "simply not in the real world", he said.
"We came here in the hope that progress could be achieved, we came here in the hope that there would be significant movement by the republican movement to enable us to move forward together," he said. "Until Sinn Fein stands here and tells the people what it is prepared to do, what am I to respond to?"
A few minutes earlier, Mr Adams had told reporters that the Good Friday peace accord could collapse unless agreement between Sinn Fein and the Ulster Unionists was reached over the arms issue and the setting up of a power-sharing executive.
"Prior decommissioning is not achievable," he said. "It is whether we move forward, based on jumping together into the future or go lurching back into the past. Our commitment is to move forward. We think it can be done but people need to take their courage in their hands."
Mr Blair last night brought President Bill Clinton up-to-date on the negotiations over a 15-minute telephone conversation. The Prime Minister's official spokesman said Mr Blair would keep the President briefed through the evening and night and they would decide at some stage if it was appropriate for Mr Clinton to become engaged in the dialogue.
Mr Clinton spoke to reporters in Chicago: " I will do whatever I can to be helpful," he said. "I'm hoping for the best. If anybody fails to fulfil any condition, including the decommissioning, at any time in the future by the appropriate deadline it can always be taken down, but it shouldn't be taken down in the absence of a failure to fulfil the conditions."
The talks continued against the ominous backdrop of a police warning that loyalist extremists are intent on using violence after the authorities banned next Sunday's Drumcree Orange Order march in Portadown.
The RUC Chief Constable, Sir Ronnie Flanagan, said: "We have intelligence to indicate that some people, a small minority, would intend to use these events to be engaged in violence.
"We are prepared for that contingency. We have that intelligence and we will be acting upon that intelligence. I think there are dissident so-called loyalists who would intend to use the forthcoming event as some sort of cover for them to be involved in violence. That's something we are alive to and we will be doing everything we can to thwart it."
He went on to urge Orange Order leaders to take into account their responsibilities for bringing large numbers of people on to the streets if it was predictable that some would exploit this and use violence.