President Clinton was holding talks with Israel's Prime Minister, Mr Ehud Barak, and the Palestinian Authority President Yasser Arafat at Camp David overnight, having flown back early from the G8 summit in the hope of brokering an Israeli-Palestinian peace deal.
The key dispute between the sides these past few days has centred on the status of Jerusalem, and sources last night indicated that it was now focused more narrowly than ever - on the Christian and Muslim holy places inside the walled Old City, and Palestinian demands for at least partial sovereignty there.
Israeli sources assert that Mr Barak has accepted an American compromise formula on Jerusalem, under which the Palestinians - who have been demanding full sovereignty throughout East Jerusalem and the Old City - would gain full control over some parts of East Jerusalem, and the status of the Old City would be left unresolved.
It was anticipated that Mr Clinton would be seeking Mr Arafat's response to this formula overnight. In recent days, Mr Arafat has been contacting various Arab leaders to establish their positions. Egypt's President, Mr Hosni Mubarak, flew to Saudi Arabia yesterday to accelerate Arab co-ordination.
In Rome, Pope John Paul II, a widely respected figure on both sides of the Israeli-Palestinian divide since his well-received visit to the Holy Land earlier this year, reiterated a call for the Old City to be granted "special status" backed by "international safeguards . . . to ensure freedom of religion and worship for all the faithful" - a request that appeared sufficiently vague as to conform with the American proposal now under discussion.
Mr Arafat's deputy, Mr Abu Mazen, returning to Camp David after a family wedding in the West Bank, was adamant that the talks would end either in a "full agreement" or nothing.
Israeli sources suggested that Mr Barak, who spent much of the weekend alone with his thoughts and a series of new poll findings, sees things much the same way. If Mr Arafat says no to the American formula, the sources said, the summit will be over today and the Prime Minister will be back home tomorrow. Those new polls, the sources claimed, indicate that a majority of Israelis would support ceding partial sovereignty to the Palestinians in Jerusalem, as part of a final treaty formally ending the Israeli-Palestinian conflict. But published polls have indicated the contrary, and the Barak aides undermined their credibility by declining to release firm figures.
Mr Barak's Foreign Minister, Mr David Levy, acting Prime Minister in his absence, continues to show his opposition to the emerging deal.
Mr Levy yesterday visited opposition activists who are holding a hunger strike to protest at the reported compromises, meeting them in a tent festooned with "Barak is losing the country" banners and, for the benefit of the TV cameras, reminding Israelis that the Prime Minister, before leaving for Camp David, had "never spoken to me about relinquishing sovereignty" anywhere in Jerusalem.
Those remarks directly echoed opposition Likud assumptions that Mr Barak has "capitulated" to Mr Arafat.
More pleasing for Mr Barak would have been news of a tour of East Jerusalem led by the Justice Minister, Mr Yossi Beilin, who visited Arab neighbour hoods in the company of a former intelligence chief and the city's ex-police commander.
Underlining Mr Beilin's assertion that Israel has no need to maintain sovereignty in these areas, and doesn't really control them anyway, was the fact that his group had to travel in a Palestinian bus, apparently because no Israeli bus companies wanted to hire out a vehicle to tour the Arab areas.
Mr Arafat is invoking "the Irish precedent" at the Camp David peace talks, Israel TV reported last night.
Mr Arafat is weighing his response to the American "bridging proposal" on the status of Jerusalem which Israel has already accepted, but which stops short of his demand for full Palestinian sovereignty in the walled Old City and the city's eastern sector.
Rather than reject the proposal, the TV report said, Mr Arafat was seeking to amend it, to achieve a peace deal under which Israel and the international community would recognise Palestinian statehood, the era of Israeli-Palestinian conflict would be formally declared to be at end, but Palestine would reserve the right to press further demands for sovereignty in Jerusalem.
By way of precedent, he was said to be citing the Irish experience, which saw the Irish Free State, established in 1922, refusing to recognise the finality of the partition from Northern Ireland.