It is understood that initial legal advice received by the government suggests that a referendum may be required in the south to endorse the changes, agreed at St Andrews, to the 1998 Good Friday agreement.

While the option of holding assembly elections north of the border and a referendum in the Republic . . . where there is tighter constitutional requirements . . . has been mooted, this is not seen as a realistic proposal.

Although the two governments would only say on Friday that the proposed deal would be subject to "endorsement by the electorate", it is understood the Irish government favours the referendum option.

There is a real sense of satisfaction within government at the progress made last week. A tangible sign of that progress was seen on Friday with the first-ever handshake between Bertie Ahern and DUP leader Ian Paisley. The handshake happened as Ahern presented a bowl carved from a 250-year-old walnut tree from the site of the Battle of the Boyne to Paisley and his wife to mark their 50th wedding anniversary.

Meanwhile, the DUP has said the key test for Sinn Fein on policing won't be an ard comhairle statement or ard fheis vote, but whether the killers of Robert McCartney are "quaking in their boots".

McCartney was stabbed to death by IRA members outside a Belfast city centre bar last year. One man has been charged with his murder and another with causing an affray.

"The killers of Robert McCartney haven't been brought to justice because eye-witnesses have been intimidated from telling police what they saw, " said DUP justice spokesman Ian Paisley jnr.

"We will be waiting to see whether a queue of people will come forward to the Police Service of Northern Ireland with genuine statements about events that night."