The head of Foreign Affairs in Papua New Guinea says the Cabinet will meet in a week's time to consider the latest options concerning the Enhanced Cooperation Programme.
There are fears in PNG that the final 40 Australian personnel still in PNG under the multi-million dollar aid programme may be pulled out this month if bilateral talks fail.
The ECP has been under threat since the PNG Supreme Court ruled in May that immunity from prosecution granted to its personnel is contrary to the PNG Consitution.
PNG would have to change its constitution to meet Australia's request for immunity, but is unwilling to do that, and there's no sign Australia has backed down.
PNG Foreign Affairs Secretary Gabriel Pepson says talks have not broken down, and PNG officials will report to Cabinet soon.
"We strongly feel that we can have that project re-designed and we can have Australians working in Papua New Guinea, which our people here all support, without going down the path of having immunities provided for them. We don't see the need for that at all."