The British and Irish governments and the pro-Belfast Agreement parties are believed to be edging close to a breakthrough that would safeguard the institutions of the Belfast Agreement and bolster the prospects of Yes candidates in the Westminster election.
The Taoiseach, Mr Ahern, and the British Prime Minister, Mr Blair, are expected at dinner in Downing Street tonight to put the final touches to a new deal that they hope the pro-agreement parties will endorse later this week or early next week.
Significant progress has been made on the issues of policing, demilitarisation and putting arms beyond use, according to sources in Dublin and London. However, politicians are warning there is still a danger that what has been achieved could unravel.
Sinn Fein sources in particular said that what the British government was currently offering fell short of their demands on policing.
While there have been some official efforts to play down the importance of tonight's Downing Street encounter, the meeting is viewed as significant. "The signs are that a deal can be pulled off, but there are still important details to be finalised when the Taoiseach and Prime Minister meet tonight," said one leading source.
"On a scale of 10 we are certainly up to seven or eight in the hope zone," he added. "People are walking on eggshells, but there is good hope that a deal will be possible soon," said another senior figure close to the negotiations.
"The emphasis is on putting together a comprehensive package on the main issues. It will involve risk-taking, but we hope that mutual self-interest will make it possible for the parties to sign up to a deal," he added.
The sources said a deal could be done at Hillsborough by the weekend or next week, with the Taoiseach, the British Prime Minister and the pro-agreement parties in attendance. A settlement would invigorate the Yes parties for the Westminster election and would be useful to Mr David Trimble as he tries to combat the challenge from the DUP.
The British government is understood to have made concessions on the SDLP demand for retrospective inquiries into alleged past actions of the RUC. It is also understood the British side is prepared to strengthen the accountability powers of the Policing Board, which is a key demand of Sinn Fein.
The movements of senior politicians also indicate expectations of breakthrough. The Minister for Foreign Affairs, Mr Cowen, has postponed a trip to Australia, while the SDLP Deputy First Minister, Mr Seamus Mallon, is cutting short a trip to France and Germany.
