Oslo's special peace envoy to the troubled island nation, Erik Solheim, left here last week without a firm word on whether the Tamil Tiger rebels and the government will accept a deal he brokered to set up a joint mechanism to distribute almost two billion dollars in relief for the survivors of the December 26 tsunamis.

But a diplomat close to the peace process said the talks last week pushed the process forward and there is hope that the aid will start flowing five months after the waves struck the island killing nearly 31,000 people and leaving almost one million homeless.

"Solheim stressed the need for both parties to abide by the ceasefire (in place since February 23, 2002)," the diplomat said, requesting anonymity. "They are still hopeful of a deal in three to four weeks."

President Chandrika Kumaratunga has said the joint mechanism would be the foundation for a final peace settlement in a country where more than 60,000 people were killed in separatist violence between 1972 and 2002.

The final stumbling block to the tsunami aid deal comes from the main Marxist party in Sri Lanka's ruling coalition.

Last week it repeated a warning to Kumaratunga not to proceed with the Oslo-proposed joint mechanism for tusnami aid or risk a collapse of the government.

The Marxist JVP, or People's Liberation Front, holds the balance of power in the 225-member parliament led by Kumaratunga's Freedom Party.

However, government sources said Kumaratunga was keen to ensure that Sri Lanka benefited from the international outpouring of sympathy and cash for tsunami survivors and there should be a mechanism to distribute such aid.

The proposed joint mechanism is meant to make it possible for international aid to reach areas controlled by the Liberation Tigers of Tamil Eelam (LTTE) in the country's northeast.

It will also make it possible for foreign donors to provide aid indirectly as domestic laws do not allow them to do business with the LTTE which has been listed as a terrorist organisation by many countries.