Israeli television suggested the accord would be signed at Erez, the crossing-point from Israel into Gaza, later today by the heads of the negotiating teams. Moshe Fogel, the Israeli government spokesman, said he could not confirm this.
After a press conference last night by the two leaders it appears unlikely that expectations of an agreement will once again be disappointed, although some negotiating is still to be done.
"I think because of the important initiative that His Majesty took we have made considerable progress and I think we can envision the end of the negotiations in sight. There is still work to be done but I think we've made a very important step forward," Mr Netanyahu said.
From the Palestinian point of view, a key concession would be an American guarantee of the date for an Israeli withdrawal from the West Bank.
King Hussein had brought a compromise formula worked out during an earlier meeting in Gaza with Yasser Arafat, the Palestinian leader, in co- ordination with Egypt and the US, Freih Abu Meddien, the Palestinian Minister of Justice, said.
He said an agreement was possible in 48 hours. During the Gaza meeting the two leaders spoke to the US peace envoy, Dennis Ross, who cancelled plans to return to Washington, and to President Hosni Mubarak of Egypt.
The compromise being discussed last night is believed to consist of guarantees by the United States for the agreement, notably a date for the conclusion of a three-stage Israeli withdrawal from the villages of the West Bank, where two-thirds of the 1.3 million Palestinians in the area live.
The Palestinians wanted the withdrawal to be concluded at the end of this year but both they and Israel are now reported to be willing to see the redeployment carried out in 1998.
At a press conference last night Mr Netanyahu, King Hussein and Mr Ross reported a breakthrough in the talks but said that total agreement had not been reached. Mr Ross said that some obstacles had been removed.
Earlier in the day friction on the ground between Palestinians and Israel was clearly visible. Just south of Bethlehem an excavator, protected by Israeli troops, was placing large brown rocks, each weighing over a ton, on a newly tarmacked road which was built in the last week to connect a string of Palestinian villages with the main highway.
"There are 1,000 people living here at Jawat el-Shamat and with the roads closed there is no way in and no way out," said Said Hindi, a local teacher, as he watched several hundred villagers drag away some smaller boulders to allow a doctor to drive down an unpaved road into the village.
The Israeli civil administration said the reasons for closing the roads to Jawat el-Shamat were that they were built without Israeli official permission and that they were unsafe for traffic. But Palestinians see such incidents as symbolising a growing confrontation with a hostile Israeli government, determined in its heart not to give up the West Bank.
Arguing furiously with a policeman, Salah al-Taamari, a member of the Palestinian legislative council, from Bethlehem, pointed to the rocks on the road and said: "He says that if we move them he will bulldoze the whole road. This shows the government's racism, its inability to look at the Palestinians as neighbours and partners in peace."Reuse content