Acting Taoiseach Enda Kenny and Fianna Fáil leader Micheál Martin are expected to personally decide within days whether any agreement between their two parties will last for two or three years.

Agreement is expected to be reached over the weekend on how Fianna Fáil will facilitate a Fine Gael-led minority government.

It is anticipated that a Dáil vote on Taoiseach, as well as the formation of a government, will take place next week, depending on a successful resolution of various talks.

Mr Martin has alerted his parliamentary party to be available to sign off on a deal either on Saturday or Monday. A number of Independent TDs who may join a Fine Gael-led minority government have also been put on standby for further talks over the weekend.

Mid-term review

It is understood the parties have agreed in principle to a mid-term review of any agreement. Differences remain over when that should happen.

So far, Fine Gael has pushed for this to take place after three years, as has been requested by the Independent Alliance group of deputies.

Fianna Fáil would prefer two years, but the matter is expected to be settled between Mr Martin and Mr Kenny rather than the two negotiating teams. It is expected to be one of a number of issues to be decided by the two leaders.

Economic focus

Irish Water and water charges did not feature in yesterday’s session, which focussed on economic policies, such as the universal social charge, and social issues.

A broad outline of an agreement on water has been reached which would see charges suspended until a new system with generous allowances is put in place. Irish Water will change from a commercial entity to a public utility.

Fianna Fáil’s Barry Cowen said that “by no means have we reached agreement”. Mr Cowen said it is hoped the deal on Irish Water and water charges can be finalised today.

At issue is the size of the allowances and the length of time the charges will be suspended.

Other differences are understood to centre on health, rural Ireland, childcare and education and rent allowance.

It is understood both parties agreed in principle to increase Garda numbers to 15,000 from the current level of 13,000.