The talks stalled last week after employers stoutly resisted union demands to introduce legislation which would prevent employers from displacing workers with cheaper foreign labour as happened with Irish Ferries before Christmas. The employers pointed out that there are already 25 pieces of legislation to protect workers' rights, though they acknowledged that these laws could be better enforced.

Employers also questioned whether the displacement of Irish workers with cheaper foreign workers was as widespread a problem as the unions were making out and suggested that the Irish Ferries dispute was a one-off.

The largest union, Siptu, however, strongly believes that the row at the shipping company was "the tip of iceberg" and warned that an "Irish Ferries on land" would herald the death of partnership.

Early last week, the Taoiseach's troubleshooter Dermot McCarthy moved the talks out of Government Buildings to the less formal atmosphere of Farmleigh House in the Phoenix Park, a decision which has cooled temperatures.

Ictu president Peter McLoone admitted that the talks, which will resume today, are "by far the most difficult and complex" negotiations he has faced in almost 20 years of such partnership negotiations. "I am more optimistic than I was last week in that employers now recognise that we have a problem which needs to be sorted, " said McLoone, "but it would be premature to talk of a breakthrough yet. If it is to happen it will probably be early this week."

It is understood that the employers and unions are still keen to do a deal but find the issue of worker displacement and employment standards is almost impossible to handle without either side facing into a complete climbdown .

Taoiseach Bertie Ahern, who has overseen almost all of the last 18 years of partnership deals with the social partners, is strongly pushing the parties to reach a compromise as soon as possible and certainly before Easter. A push is now on to wrap up a deal before the teachers' unions hold their conferences over the Easter weekend.