Fianna Fáil and Fine Gael's talks, on a minority led administration, have been held up by the parties' differing opinions on water charges.
But reports today suggest that a compromise could be reached in the coming days, which would involve suspending charges until a new system with generous allowances is put in place.
Fine Gael's Acting Minister for Jobs, Richard Bruton, believes a deal between the two old rivals is possible.
Meanwhile, Sinn Fein says any deal that results in water charges being retained would be the 'ultimate betrayal' of Irish voters.
Pearse Doherty says 99 TDs were elected on platforms to abolish water charges, including Fianna Fáil – but this will not be delivered.
