Finance ministers from the 12 euro-zone countries have made "progress" on plans to reform the Growth and Stability Pact following a six hour debate.

Luxembourg finance minister Mr Jean-Claude Juncker, whose country currently heads the EU, said yesterday that "people are abandoning extreme positions... [ and] constructively looking at new suggestions".

Mr Juncker also said that "not a single jot or comma of the treaty is being called into question" including the central requirement of countries keeping budget deficits below 3 per cent of GDP and the ability of the European Commission to initiate disciplinary procedures against an offending member state - the first step leading to a fine.

However, divisions remain about the circumstances in which a member state can be brought to book for running a deficit in excess of the 3 per cent ceiling.

The Commission's authority to do this has been generally undermined by serial pact-breakers Germany and France, which prompted the current discussion on pact reform.

German chancellor Mr Gerhard Schröder compounded the debate at the beginning of the week by making a strong call to reduce the powers of the Commission to interfere in the running of member states' fiscal policy.

Other issues that have to be agreed before the political deadline of March 23rd include whether there should be a catalogue of criteria to be taken into account before an excessive deficit procedure is started.

The catalogue idea was also introduced by Mr Schröder, but again there is debate about how extensive the list should be with countries such as Austria pushing for a "narrow" set of criteria.

A concrete area of agreement, on the other hand, was that blocks of expenditure, such as for research and development or military expenditure, cannot be excluded from calculating excessive deficits.

For its part, the Republic of Ireland believes that the stability pact should underpin "sound and sustainable" fiscal policies and should not be made too flexible.

The Minister for Finance, Mr Brian Cowen, stressed during the debate that any reform of the pact should take into account the Republic's low debt level and high infrastructural investments needed to bring the country up to EU levels.

Yesterday's meeting also agreed that Greece must do more to bring down its budget deficit, currently running at more than 5 per cent.

Greece is now the closest any euro-zone country has been to being sanctioned, with the Commission to make a further recommendation on the state of its deficit next month.

A recommendation 14 months ago to bring Germany and France to book over their excessive deficits was blocked in the finance council and is now on ice.

Finance ministers also agreed to release €100 million in humanitarian aid for the tsunami-struck regions in south-east Asia. The total amount of money from the EU and its member states pledged to the region is around €1.5 billion.