As the North's political parties prepare for a new drive next month to restore the Assembly and power sharing executive at Stormont, Northern Ireland Secretary Mr Paul Murphy said he was encouraged by recent statements from unionist and republican leaders.
However he insisted parties faced tough decisions next month at set-piece talks in Maidstone involving the Taoiseach, Mr Ahern, and British Prime Minister, Mr Tony Blair.
Among the issues they would need to resolve were the ending of all paramilitary activity, arms decommissioning, the stability of the political institutions and the transfer of policing and justice powers from Westminster to Stormont.
Mr Murphy told reporters "I have been pleased with what we have heard and seen over the past few weeks.
"Some of the statements which have made have been very encouraging and the fact is that while there has been some difficulty over marches it has certainly not been as bad as the past.
"All of these augur well for the seriousness with which local politicians will tackle the restoration of the institutions.
"The fact is we all know the issues which have to be addressed. We are at a crucial phase in the process which, as the Prime Minister said at Lancaster House, will be a point of decision."
Several senior figures in the DUP have told republicans in recent weeks that if the IRA winds down and there is conclusive disarmament they will be prepared to share power with Sinn Fein.
Lagan Valley MP Mr Jeffrey Donaldson and DUP deputy leader Mr Peter Robinson have also vowed to work political institutions in good faith if a deal is struck next month.
Mr Robinson also indicated two weeks ago his party wanted the transfer of policing and justice powers to Stormont but the IRA would have to address its future by ending all criminal and paramilitary activity and emptying its arms dumps.
Sinn Fein leader Mr Gerry Adams raised hope of a breakthrough earlier this month when he told republicans they must be prepared to remove the IRA as an excuse for unionists not to engage with them.
However Mr Adams has also insisted the IRA will only disappear in the context of unionists agreeing to work political institutions properly and the British and Irish Governments implementing
the Belfast Agreement and other peace process pledges.
These include commitments on the scaling down of the Army presence in Northern Ireland, human rights, equality, amnesties for on-the-run paramilitaries and policing.
Despite these comments, the gap between the DUP and Sinn Fein's position is still considerable.
One source said today he believed a deal during talks on September 16th to 18th at Leeds Castle in Maidstone was possible.
"You can see how a deal might be done and at this stage, I would put the odds at fifty-fifty," he said.