The deal is expected to end the month long political impasses that has resulted to over 1000 deaths and over 500,000 people displaced when post-election violence hit Kenya over the Dec 27 disputed presidential elections.
Last week, pressure mounted on the two protagonists to end the impasse.
The United Nation Security Council passed a resolution calling on President Mwai Kibaki and ODM's Raila Odinga to embrace the mediation talks led by the former UN boss while the United States and EU have threatened to take tough measures against any body threatening to sabotage the mediation efforts.
President Kibaki and ODM leader Raila Odinga held a third round of talks Friday as possibilities for a power sharing deal became evident.
"We have agreed that what Kenya needs is a political settlement and we will be dealing with this in the next few days". Said Kofi Annan.
Raila Odinga indicated that his party will cede ground and allow for a compromise for the sake of peace.
However, analysts warn that any power sharing arrangement will require legislative guarantees that must be put in place soon.
ODM-Kenya leader Kalonzo Musyoka has warned that the move will undermine multi-party democracy.
Kalonzo who is the Vice President in a lose coalition with Kibaki's PNU cried foul as his fate hangs on the balance.
ODM and Government are optimistic that a deal is likely in the next few days as Kofi Annan presses for an extra-ordinary session of parliament to debt the deal.
In a power-sharing government, the prime minister and President will share the executive authority in a Government of national unity.
This formation of government has been proposed in the draft constitution that was defeated in a referendum in 2005.
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burial of violence victim photo galleryKeywords: kenya_elections
Parties to the mediation are expected to agree on a power sharing deal as the talks enter the most critical stage this week.
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