Negotiators discussing Greece's bailout came closer to an accord in late night talks on Thursday but are still short of a final deal over some 11.5 billion euros (9.1 billion pounds) of spending cuts demanded by international creditors, officials said after talks concluded.
The European Union, International Monetary Fund and European Central Bank "troika" team visiting Athens has rejected some of the measures proposed by the Greek government, holding up final agreement on unlocking the next instalment of Greece's 31.5 billion-euro bailout package.
A senior official said the late night talks secured agreement on several points including the symbolically important step of raising the pension age to 67 years. He said further advances were likely when talks resume on Friday.
"There was some progress, a funding gap remains but there are novel ideas as to how it can be covered," the official told reporters waiting at the finance ministry.
He said an agreement at the technical level might come as soon as Friday after which the troika leaders could leave to prepare their report.
Previously, officials said a deal may not be in place by the time the troika leaders would leave at the weekend, meaning they would have to return next week to wrap up the agreement, which must be finalised in time for an October 8 meeting of Eurogroup finance ministers.
Prime Minister Antonis Samaras's government has acknowledged that the talks with the troika have been "difficult" with the inspectors pressing Athens to make deep cuts and accept an end to its taboo on firing civil servants.
Greek officials said agreement on 9.5 billion euros of the 11.5 billion-euro package of spending cuts had been reached.
A total of 6.5 billion euros in cuts to wages, pensions and benefit payments had been agreed and a further 1.1 billion euros in savings were planned from an increase in the retirement age.
An additional 1.9 billion euros would come in savings from various modernisation measures approved by the troika, leaving the two sides still wrangling over some 2 billion euros in proposed savings in health, defence and local government.
Separately, the government unveiled the outlines of a plan to raise an additional 2 billion euros in 2013-14 through improved tax collection and measures to fight tax evasion.
'STOP ATTACKING GREEKS'
Samaras's fragile conservative-led coalition shows increasing signs of buckling under the strain of finding common ground over measures that no politician wants to be linked to.
A meeting on Thursday between Samaras and his Socialist and leftist allies failed to produce broad political agreement on the cuts, and talks were adjourned until next week.
"The troika should stop attacking Greek people," Fotis Kouvelis, head of the small Democratic Left party, told reporters after the meeting. "People have their limits."
The austerity plan - which targets savings over 2013 and 2014 - includes cuts to health and defence spending, a plan for a "labour reserve" to dismiss civil servants, and reductions in welfare and disability benefits.
Anti-austerity protests are picking up pace after the traditional August summer break. On Thursday, subway, city train and tram workers held a 24-hour strike, and major unions plan a general strike next week.
(Editing by Ruth Pitchford and Mohammad Zargham)