Zimbabwean President Robert Mugabe and top opposition leader Morgan Tsvangirai have both spoken positively about their talks in Harare on sharing power.
After two days of discussions in a hotel, the two men both said they hoped to address the outstanding issues between them on Wednesday.
"I must say that there is a positive development," Mr Tsvangirai added.
Speaking to reporters, Mr Mugabe noted there had been "progress - and lack of it - in some areas".
South Africa's national broadcaster, the SABC, reported earlier that a fresh document had been tabled providing the opposition leader with more power, as an executive prime minister.
Mr Tsvangirai's Movement for Democratic Change (MDC) would like Mr Mugabe to become a ceremonial president with Mr Tsvangirai running the country.
But Mr Mugabe's Zanu-PF party says the president should retain control of the security services and the powers to appoint and dismiss ministers.
Donors have been withholding aid to rescue the collapsing economy until the opposition are given real power in government.
South African President Thabo Mbeki is mediating in the negotiations.
'Finality and closure'
"Nothing has been concluded yet but we are hoping that tomorrow [Wednesday] we will be able to look at the outstanding issues," Mr Tsvangirai was quoted as saying by Reuters news agency.
Mr Mugabe said "one or two areas" were still outstanding.
"We are still going to talk. We are finishing tomorrow [Wednesday]," he said, according to Reuters.
Arthur Mutambara, leader of a breakaway MDC faction who has also attended the talks, talked of "tremendous progress".
"We hope tomorrow [Wednesday], we will be able to bring finality and closure to the dialogue process," he said.
Talks between the government and the MDC in August broke down after they agreed that Mr Tsvangirai would be named prime minister while Mr Mugabe remained president, but failed to agree on how to share powers.
The MDC leader gained more votes than Mr Mugabe in March elections but official results say he did not pass the 50% threshold for outright victory.
Mr Tsvangirai pulled out of the June run-off, saying some 200 of his supporters had been killed and 200,000 forced from their homes in a campaign of violence led by the army and supporters of the ruling Zanu-PF.
Zanu-PF has denied the claims and accused the MDC of both exaggerating the scale of the violence and being responsible for it.
Positive signs at Zimbabwe talks
5:52 PM
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