Proposals for the partial sale of Aer Lingus and a second terminal at Dublin airport are to go to Cabinet next week, although there is still no agreement between Fianna Fáil and the Progressive Democrats on parts of the aviation package.

The set of proposals, which also includes changes to the Shannon stopover, had been expected to come before the Cabinet yesterday but was again delayed due to ongoing differences on the second terminal.

While there is broad outline agreement on the reform package, it is believed there is still some distance between the coalition partners on the second terminal issues.

Officials representing Tánaiste Mary Harney are to hold talks over the coming week with counterparts from the Taoiseach's office and the office of Minister for Transport Martin Cullen to break the impasse.

The Tánaiste is continuing to look for the second terminal to be independently run and operated.

The Taoiseach and Mr Cullen on the other hand have no great problem with the Dublin Airport Authority being allowed to run the new terminal.

According to Government sources there were "genuine attempts being made within Government to resolve this".

There is no divergence on proposals for the sale of 51 per cent of Aer Lingus to fund its ongoing development. However, it is yet to be decided whether this will be by flotation or otherwise.