However, there is still disagreement on one clause in the emerging accord barring both sides from taking unilateral actions in the West Bank and Gaza strip, said the officials, speaking on condition of anonymity.

Palestinian negotiators could not immediately be reached for comment. When the United States officials were contacted they only said that it was possible to reach to an agreement.

The Israeli officials said a signing ceremony is likely to take place in the Egyptian Red Sea Resort of Sharmel-Sheikh on Saturday, after the end of the Jewish sabbath.

One official said the Palestinians in the end had accepted an Israeli offer to release 350 Palestinians held for anti-Israel activities. The Palestinians had been insisting on the release of 400 prisoners. Earlier reports saidthe Israeli offer stood at 356 prisoners.

Earlier Friday morning talks between Israeli Prime Minister Ehud Barak and US Secretary of State Madeleine Albright had failed to yield any result on Israeli-Palestinian agreement on implementing the Wye River Peace Deal, said Barak's office.

"The Americans continue their efforts to assist in a conclusion to negotiations with the Palestinians to enable the signing of an agreement," said a statement from Barak's office released after three and a half hours of discussions between Barak, Albright and their teams which focussed on "all the tracks of the peace process".

As part of a revised Wye River Accord, Israel had offered to release 356 Palestinian prisoners jailed for security-related offences, but Palestinians wanted 400 freed.

Barak, who has pledged to make peace with the Palestinians, Syria and Lebanon, has sought to modify the deal which Netanyahu signed with Arafat at Wye River, Maryland, last year and then froze over alleged Palestinian violations.

Itprovides for an Israeli troop pullout from a further 13 per cent of the West Bank in return for Palestinian security steps and was accompanied by unwritten Israeli commitments to free prisoners. Barak has said he would implement the deal in its original form if the Palestinians could not agree on modifications.