South African President Thabo Mbeki, mediating in Zimbabwe's crisis, began meetings with President Robert Mugabe and the country's opposition leaders on Sunday amid signs a power-sharing deal is close.
The discussions are the clearest sign yet that an agreement, which could end the post-election political crisis and increase the chances of recovery from an economic catastrophe, is within reach.
State radio did not give details on the discussions between Mbeki, Mugabe, opposition MDC leader Morgan Tsvangirai and Arthur Mutambara, leader of the breakaway MDC faction.
Talks began last month in the aftermath of Mugabe's re-election unopposed in June in a poll condemned around the world and boycotted by Tsvangirai because of attacks on his supporters.
Mutambara said in a newspaper article earlier that a compromise agreement was close. He said that despite limitations it offered the "best temporary measure to extricate the country from its worst situation".
A deal could mean Mugabe has survived elections that posed the biggest challenge to his rule, but might also remove some of the power that has allowed him to govern with an iron hand.
Both sides are under pressure for a deal.
Zimbabweans and neighbouring countries hope an agreement could end years of political turmoil and revive an economy whose collapse has spilled millions of people across Zimbabwe's borders.
Investors are nevertheless likely to remain cautious about making financial commitments, seeking tangible signs of long-term political stability and a government with the credentials to rebuild the country.
A senior ruling ZANU-PF official said on Sunday that Tsvangirai, Mugabe and Mutambara were expected to hold three-way talks.
Any deal would require a green light from security and military chiefs, powerful figures with wide sway over Mugabe who want to make sure they are not vulnerable to international prosecution when the political dust settles, analysts say.
The ZANU-PF official said a major breakthrough was reached when the MDC agreed to recognise Mugabe's legitimacy as president. He said Mugabe's position was not negotiable.
ZANU-PF had agreed on Tsvangirai as prime minister, but "not in the sense" of media reports which have said he will be given executive powers while Mugabe becomes a ceremonial president, said the ZANU-PF official.
MDC officials were not immediately available for comment.
Helping to secure a settlement before he hosts an Aug. 16 summit in South Africa of regional leaders he has represented in the mediation could be a political coup for Mbeki.
Mbeki has come under intense criticism at home and abroad for not taking a tough line with Mugabe, a policy he argues would only backfire and deepen tensions.