Taoiseach Bertie Ahern and Tánaiste Mary Harney are to hold talks ahead of a Cabinet meeting today to reach a compromise on the proposed second terminal at Dublin airport.
The issue of the second terminal is also due to be discussed at the Cabinet meeting, although, as of last night, there was no indication of a deal between the coalition partners.
Government sources said it was "unclear" as to whether a compromise agreement could be reached in time for approval by the Cabinet today, although there was increasing optimism that a deal between both parties was close.
Discussions between the parties have been ongoing since before Easter on the terminal after the Tánaiste indicated that there would have to be competition between the terminals.
Minister for Transport Martin Cullen and Fianna Fáil want the current owner of the airport, the Dublin Airport Authority (DAA), to own the second terminal, and to be able to tender for the operation of the facility.
Yesterday, Ms Harney again played down suggestions of a rift between the Progressive Democrats and Fianna Fáil on the terminal.
She said she remained optimistic that a deal could be reached. "We acknowledge that we have a different approach.
"We are equally determined to ensure that we resolve the issue, and I believe we can resolve the issue with good will, but only on the basis of some movement from both parties in relation to this issue."
Ms Harney reiterated her belief that there must be competition at the airport, although she left open the possibility that the DAA could be allowed to operate the airport.
"There's a number of ways we can approach this. We can put the proposal out to tender and let the best tender win, even if that included DAA because it was selected after a tender and after competition.
"Clearly it would have to be selected on the basis of efficiency, but unless we have, in my view, competition at the airport, I do not believe we will drive the kind of efficiencies that we can expect to get at the airport in the capital. And that's the issue."
This is close to what Mr Cullen has also advocated as a compromise deal.
The Attorney General is also believed to have advised that the DAA could not be excluded from a competitive tender process.
Officials have spent the last week trying to identify a compromise solution that could lead to an agreement between the two parties.
The possibility of a third terminal has also been discussed in the context of an overall deal, with the Department of Transport suggesting that preparatory planning work begin on it at once, with construction to begin after the second terminal is built.
This proposal is believed to be linked to the second terminal being a smaller development than the €400 million project currently envisaged.