It emerged at Westminster last night that one option for overcoming the impasse is for the two sides to agree to a brief statement acknowledging the 'collective' aspirations of the people of Northern Ireland - nationalist and Unionist - and to put off detailed work on the constitutional issue until later.
Officials are working to overcome the obstacles for a joint declaration before Christmas, which John Major and Albert Reynolds, the Irish Prime Minister, will discuss in the margins of the European Council meeting at the weekend.
A Dublin source said yesterday: 'The legitimacy of the nationalist aspirations for a united Ireland have never been accepted by the British government. On the other side, we have never accepted the legitimacy of the Unionist aspirations. The key is for both sides to accept the political legitimacy of these aspirations.'
British officials fear that accepting the legitimacy of the nationalist aspirations will wreck Unionist support for an agreement.
Downing Street was yesterday damping down the prospects of an agreement fulfilling Mr Reynolds's hope of 'peace by Christmas'. However, the Prime Minister's office is not ruling out a joint statement before Christmas and a further meeting has been agreed in principle.
The sources also confirmed that both governments were hoping to persuade the IRA, through the secret links which remain open, to extend the Christmas ceasefire into an indefinite cessation of violence.
Kevin McNamara, the Labour spokesman on Northern Ireland, last night urged Mr Major to accept a compromise. 'Both governments have got to realise that compromise has to be made in order to guarantee the position of the Unionists and to meet the aspirations of the nationalists,' Mr McNamara said.
Sinn Fein has opened contacts in Brussels with officials of European countries, the EC and the European Parliament, writes Andrew Marshall in Brussels. The move is part of an attempt to widen the dialogue on Northern Ireland and put pressure on the British government before the prime ministers meet in Brussels on Friday.
Sinn Fein and the Belgian government confirmed yesterday that the republicans had spoken with officials from Belgium, which currently holds the presidency of the European Union.
Officials of the republican group said contacts had taken place with other officials and member states 'to properly appraise the international community how we see their role in aiding a peaceful resolution of the conflict and a national reconciliation in Ireland'.
A prominent Presbyterian minister, Roy McGee, yesterday warned that the prospects for peace in Northern Ireland were slipping away following the murders of two Catholics, Brian Duffy, 15, and John Todd, 31, who were shot as they sat in a taxi in a Catholic area of north Belfast's Ligoniel district late on Sunday night.