The caretaker President of Nauru, Marcus Stephen, says his Government and the Opposition are considering forming a coalition in an effort to end a more than three-week long political stalemate.
This comes after the Opposition's Godfrey Thoma, elected Speaker last Thursday, resigned today when the Government ignored his demand that it call fresh elections.
But Mr Stephen believes progress has been made this week with discussions between the camps on forming a coalition.
However he says they cannot agree to Opposition demands that it take the Presidency in a new administration.
"I don't know where in the world where a government just gives its government away. It's something that is not done - it's a bit unprecedented. And we told them straight out and said that's an issue where we find it unacceptable and we are hoping that we will take the presidency and then from there we can discuss other options."
The Nauru Parliament is due to meet again on Thursday.