Politics: Blair and Ahern set sights on referendum

TONY BLAIR and Bertie Ahern, the Irish Prime Minister, last night agreed to go ahead with a referendum on both sides of the border, pencilled in for 7 May, in spite of the suspension of Sinn Fein from the cross-party talks.

Mr Blair yesterday said he remained "cautiously, perhaps stubbornly optimistic" in spite of the renewed killings in bombings in the province. "Northern Ireland tears at my heart," he said before meeting Mr Ahern.

The two governments will present the parties with a paper setting out their basis for a settlement before the end of March, and last night the two leaders made it clear they were keeping up the peace momentum. "Provided we keep focused on the substance and fixed on the deadline, a settlement remains not just possible, but it is the only logical outcome of the process under way," said Mr Blair's spokesman.

Downing Street said no decision had been reached over the Sinn Fein demand to see Mr Blair before its representatives are allowed to rejoin the talks process on 9 March.

Earlier the UDP, who were suspended for the talks over loyalist killings, urged Mr Blair not to meet Sinn Fein leaders before their suspension was complete. The threat of a Unionist walk-out could prevent Mr Blair from meeting Gerry Adams or Martin McGuinness in spite of their claims it could happen soon.

One option could be for Mr Blair to meet them shortly before they are due to return to the talks on 9 March. The warning against an earlier meeting will be reinforced today by David Trimble, the Ulster Unionist leader, in separate talks with Mr Blair at Downing Street and Mr Ahern, who was stopping overnight in London.

The Taoiseach said the talks with Mr Blair concentrated on the paper which will propose cross-border bodies, an assembly in the North, a council of the islands, and continuing north-south meetings between the two governments and officials. The two governments are anxious for agreement before the marching season starts at Easter.