Although Mr Blair and the Irish government were immensely heartened by far-reaching Sinn Fein proposals that envisaged full IRA decommissioning in less than a year, a tough rejoinder from Ulster Unionists meant the mood remained downbeat throughout the day.
A surge of hope was generated in the early evening, however, when the Prime Minister's official spokesman said he believed that an agreement was possible. He added: "When people see how close this is, if it fails they simply will not understand why.
"At today's round-table talks the Prime Minister said there was so much agreement between the parties that it had to be possible to conclude a final agreement on the two central issues. If there was not hope that we could get it sorted, we would not be here. There is certainly a sense of determination that we will do it."
Mr Blair and other participants such as the Sinn Fein president, Gerry Adams, were clearly suffering from exhaustion after a marathon 18-hour session, which had ended, suddenly and without agreement, at 4am yesterday.
But the governments and parties reconvened at noon and slogged on throughout the day in an effort to close the gap between Unionists and republicans. The atmosphere was not helped when both these elements accused each other of bad faith and deception.
At the heart of negotiations is a Sinn Fein offer that in effect promises to ask the IRA to render all of its weapons inoperable by May 2000, the second anniversary of the Good Friday Agreement. This deal goes far beyond what almost every participant and observer thought possible.
Guarantees and clear penalties for the republican movement are built into the proposal, which is being offered in exchange for the immediate entry of Sinn Fein into a new Northern Ireland government. Decommissioning would begin in December.
The emergence of the idea led, however, not to a breakthrough but a near- crisis for David Trimble's Ulster Unionists, since it did not meet their stated position that decommissioning should start simultaneously with the formation of a government.
Some Unionist representatives apparently fear a political drubbing from hardline loyalist opponents if the proposition is accepted, given that it would mean Martin McGuinness and another Sinn Fein member becoming government ministers before any weaponry is decommissioned.
The annual contentious Drumcree Orange march, due on Sunday in Portadown, has already been banned, giving rise to apprehension that, as in previous years, trouble will break out on the streets. The formation of a government in advance of decommissioning would, some feel, leave the party vulnerable to an anti-Trimble campaign.
Against that, London, Dublin and Washington are all intensely interested in the republican initiative. Mr Blair said: "I believe that what we have witnessed in the past few days are historic, seismic shifts in the political landscape of Northern Ireland."
Mr Blair said he sought to reassure Unionists that guarantees would be put in place to ensure that republicans honoured pledges on decommissioning, declaring: "We are prepared, as government, to give absolute legal failsafes." He said there would be sanctions if they did not.
Mr Trimble, however, projected huge mistrust when he responded: "Some willing people, some willing fools, have allowed themselves to be persuaded by some of the things that have been said. But despite the spin, despite the smoke and mirrors, there has been no commitment made by the republican movement to decommission in terms that would be recognised by the unionist community." Speaking just after noon, Mr Trimble insisted he had been given no definitive idea of the Sinn Fein proposals.
Mr Adams said in a response: "For Mr Trimble to say that his party are not aware of the Sinn Fein propositions is wrong. We were advised in dealing with the two governments that the British government would convey all of this to the Unionist party.
"The British Prime Minister told me yesterday that he had showed our propositions to the Unionist party leadership. Martin McGuinness and I met the Unionist negotiating team. We spelt out graphically what was contained in our propositions."
This appeared to be backed up by the Prime Minister's spokesman who, when asked whether the Unionists had seen republican proposals in writing, replied: "Yes."
The Taoiseach, Bertie Ahern, commented: "We have an awful lot to gain, but a frightening amount to lose. There was compromise yesterday, there was progress. Things were given that were never given before."
President Bill Clinton was highly active during the negotiations, speaking by telephone to Mr Blair, Mr Trimble and Mr Adams. Mr Adams said he had asked Mr Clinton to "use his good offices to save this process".
Meanwhile, Tony Blair was set for another meeting with Portadown Orangemen in a fresh attempt to solve the Drumcree crisis before Sunday's parade. It was understood that a meeting was being arranged following discussions between the Prime Minister and the Orangemen at Stormont on Wednesday night. The Orangemen described the 40-minute meeting as "constructive".
More than 1,300 troops have been drafted into Northern Ireland from their bases in England to boost security levels. Hundreds of them are ready to move into Portadown before the parade amid warnings from the Royal Ulster Constabulary Chief Constable, Sir Ronnie Flanagan, that loyalist dissidents were preparing to exploit sectarian tensions.Reuse content