Sinn Féin and the DUP are considering a compromise proposal that could avert a potential crisis in the power-sharing Executive.
Both parties have held meetings recently with British Prime Minister Gordon Brown amid claims of a major breakdown in relations on a range of issues.
The main stumbling block is understood to be the devolution of policing and justice powers, which was due to happen last May, but has been blocked by the DUP on the grounds that unionists need more time to gain confidence in Sinn Féin's non-violent credentials.
The two parties have now confirmed that they are actively considering a compromise proposal that would lead to a new Ministry for Policing being held by a member of the Alliance Party.