By NIGEL MORRIS and DAVID MCKITTRICK
The hope of finding a measure of agreement between republicans and Unionists in advance of crucial elections to the Belfast Assembly was on Monday night faint but alive following a day of talks in London.
Tony Blair said he was optimistic that the year-long political deadlock in Northern Ireland could soon be broken as he stepped up efforts to restore devolution to the province.
Talks at Downing Street involved Mr Blair, Irish Taoiseach Bertie Ahern, Ulster Unionist leader David Trimble and Sinn Fein president Gerry Adams. Richard Haass, special adviser on Northern Ireland to President Bush, was also involved.
Later, contacts continued between Mr Trimble and Mr Adams. The British and Irish governments hope to announce that a fresh set of elections to the Northern Ireland Assembly will be held next month, preferably on November 13.
But they very much hope that a republican-Unionist deal can be struck to help ensure the elections will be followed by the formation of a new coalition government.
Speaking after yesterday's talks in Downing Street, the Prime Minister said: "The omens are very, very good if we can find the right ways of having elections in a positive and constructive atmosphere."
Early and probably unrealistic hopes that a deal could be struck yesterday soon evaporated, but talks will continue on Tuesday between the parties and Government officials.
Hopes persist that enough progress can be made by the end of the week to fix a date for elections next month. Alternatively, the Government is prepared to press ahead with elections without an agreement between the parties.
Republicans are under pressure from all sides to produce a new, more strongly-worded statement that paramilitary activities have been permanently abandoned and to conduct a third act of decommissioning.
Meanwhile, Sinn Fein is calling for a guarantee that a future Stormont Assembly could not be suspended under Unionist pressure and the rapid transfer of police and security powers from London to Belfast.
Mr Blair struck an upbeat note yesterday, arguing that Northern Ireland had made "tremendous progress" and noting that the province had witnessed one of its quietist summers for years.
"The general atmosphere, the climate is conducive to finding a way forward and I hope we can because we owe it to the people of Northern Ireland," he said.
But a British Government source said: "It was a positive meeting, but there's no guarantee of success at this stage."David Trimble said: "There has been useful work done. The work will continue and I hope there will eventually be a successful outcome to this, but that's not just here yet."
He added: "We need to see that there is going to be de-commissioning of weapons, an end of paramilitary activity, people being fully committed to working with the institutions in the spirit of the [Good Friday] Agreement and we haven't quite got all of that yet."
Gerry Adams, the Sinn Fein president, described the talks as "a series of positive engagements", but stressed that there was still a "volume of work to be done".
He said: "If we continue the type of very, very focused approach that we've taken, I still remain hopeful that we will get to where we want to be."
Mr Adams added: "Our conviction is that whatever happens in the shorter term, in the long term all of these issues are going to be resolved.
"This process is going to move people forward into a dispensation that is based on justice and on peace. That's my gut feeling."
Mr Ahern said the atmosphere among the Northern Ireland parties suggested that they wanted to reach an accommodation. But he conceded this would not be easy and "time was short".
The Assembly was suspended on October 14, 2002, following fresh allegations of IRA activity, including the revelation of a republican spy ring operating at Stormont.
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