A deal on Irish Water can be reached if there is compromise between Fianna Fáil and Fine Gael, Fianna Fáil TD Michael McGrath has said.

Negotiating teams from both parties are resuming talks in Trinity College this evening.

Irish Water and water charges are the main sticking points in the talks to outline how Fianna Fáil will facilitate a Fine Gael-led minority government.

“Clearly there are policy issues that we want to see addressed,” Mr McGrath said. “We have made good progress and we’re going in to the process with good faith and goodwill on all sides.

“And if there is goodwill on all sides, an agreement can be reached for the good of the country.

“The art of every negotiation is compromise and if everyone takes an absolutist position of every position then you never agree anything.”

Dublin Bay South Fianna Fáil TD Jim O’Callaghan said: “We know that the public is very anxious a government is formed promptly. We are seeking to do our part in doing that.

“There is a time limit to these talks - obviously they can’t go on endlessly.

“We recognise how anxious people are for this process to be concluded.”

Arriving at Trinity College, Minister for Finance Michael Noonan said the talks are down to “five or six net points - and Irish Water is obviously one of them”.

“Both sides are seeking a solution which will be in line with the priorities of both sides,” he said.

When asked how long it will take for the talks to conclude, Minister for Agriculture Simon Coveney said: “The sooner, the better.”

Minister for Justice Frances Fitzgerald said Fine Gael is in a “positive frame of mind”.

Fail to reach deal

Earlier on Wednesday, acting Taoiseach Enda Kenny and Fianna Fáil leader Micheál Martin failed to reach any agreement over the future of water charges and Irish Water.

With talks between the two parties apparently stuck on water issues, the two men met on Wednesday morning to discuss a way forward. However, it appears little progress was made in overcoming the disagreements between the parties, and no resolution of the issue resulted from the meeting.

Their failure to agree marks a significant blow to the chances to securing an agreement between the two parties which would allow a government to be formed.

Normally where there is a blockage in these circumstances the issue would be “kicked upstairs” for the party leaders to settle. However, the attempt to solve the problem by that route appears to have failed.

Fianna Fáil remains adamant that water charges must be abolished for at least the next five years.

Fine Gael for its part remains insistent that the principle of charging for water remains in place.

Last week, its parliamentary party passed a motion - the second since the general election - reconfirming its commitment to this policy.

Meanwhile, Anti Austerity Alliance TD Paul Murphy said earlier on Wednesday that the talks between Fine Gael and Fianna Fáil have the potential "to be a dodgy deal" and could lead Fianna Fáil to betray their election promises on the issue.

“What we’re hearing about is the potential for a very dodgy deal between Fianna Fáil and Fine Gael to betray the election promise of Fianna Fáil and the mandate on which they and some of the Independents were elected,” he said.

Speaking on RTÉ's Sean O'Rourke Show, he said he believes there will be a significant increase of non-payment of water charges.

“I think people have stopped paying Irish Water bills because of the uncertainty. Fifty per cent didn’t pay for the last quarter of 2015,” he said.

“Fianna Fáil will be making a very big mistake if they go down this route - if they think their mandate is for some sort of deal like this.

“Fianna Fáil are not in negotiations to form a government, they are in negotiations to facilitate the formation of a government. They have been at pains to say they are not going into government; that they are respecting their mandate by not going into government with Enda Kenny.”

Fianna Fáil’s mandate also included water charges, he said.

“There is a significant majority in the Dáil in favour, at the very least, to suspend water charges for five years. They don’t need to do a deal with Fine Gael,” he said.

“They can come into the Dáil, join with the AAA-PBP to pass a motion demanding legislation to abolish water charges and Irish Water. It’s quite simple.

“The people spoke in the election and they should be respected.”