As Tony Blair and Bertie Ahern brought the key players to Downing Street, government officials initially played down hopes of a breakthrough on the IRA's refusal to decommission its weapons But as negotiations developed into a series of talks in separate rooms inside Number 10, government spokesmen were cautiously more optimistic.
They took it as a positive sign that the talks overran their planned schedule by more than two hours as the parties spent the afternoon arguing over compromise proposals.
The Sinn Fein team, led by Gerry Adams, the Sinn Fein president, stayed in a first floor room as Mr Blair and Mr Ahern met party leaders downstairs.
The two Prime Ministers had planned a series of separate bilateral meetings with Mr Adams, John Hume, of the SDLP, David Trimble, the Ulster Unionist leader, and Ian Paisley, the DUP leader. But they used the Downing Street meeting to press the party leaders to make compromises.
The Irish Prime Minister made it clear in advance of yesterday's talks that he was opposed to a British compromise allowing the executive to be set up for six months without its full powers, to provide more time for the decommissioning obstacles to be overcome.
Mr Hume and his deputy, Seamus Mallon, also strongly argued against "parking" the talks. Both London and Dublin insisted that they wanted to avoid a delay and believed there was a need to continue the momentum of the talks.
Mr Paisley betrayed no hint of compromise by the hardline Democratic Unionists, and warned that he would use his European election campaign as a referendum against the Good Friday Agreement. "This election gives an opportunity for people to reverse the decision they were conned into making at the referendum a year ago," said Mr Paisley.
"The Prime Minister is prepared to tailor all of his discussions to get concessions for IRA/Sinn Fein. Mr Ahern has said that IRA/Sinn Fein are entitled to two seats on the executive and he is going to fight for that. My party is entitled to two seats as well.
"Mr Blair has tried by hook and by crook to ignore the Democratic Unionists. I'm going to press him to make a statement that he must be equally committed to the DUP.
"We're in a very dangerous situation at this time. The only hope for this country is a return to democracy."
Mr Trimble, Northern Ireland's First Minister, while under pressure to allow Mr Adams into his power-sharing executive, is also mindful of strong feelings within his own party that he must give no ground on the decommissioning of IRA weapons. He called for loyalist paramilitaries to give up their weapons as part of the peace process.
A Downing Street spokesman said last night: "We are inching forward, but there is no magic wand. It is expected there will be a further round of talks next week."