British Chancellor of the Exchequer Gordon Brown has announced an extra £1bn for infrastructural development, which could support a deferment of water charges in Northern Ireland.
The Irish Government is to contribute £400m toward the fund.
The chancellor is also to set up a new employment fund, which he said would raise the possibility of 5,000 extra jobs for the province over the next few years.
Mr Brown's announcement follows a meeting with the Northern Ireland parties.
He has also set up a Commission to review the differentials in corporation tax rates between the North and the South.
The commission, headed by David Varney, a former head of the UK's Inland Revenue is to report to Mr Brown in the autumn.
The DUP leader, Ian Paisley, said headway had been made at the meeting, but not very great headway.
Mr Paisley also revealed that he had taken a phone call from US President George W Bush during this morning's Downing Street talks.
The party's deputy leader, Peter Robinson, said the Chancellor's package was an improvement on the previous package and that the Varney review at least opened the door to a reduction in corporation tax.
Sinn Féin negotiator Mitchell McLaughlin welcomed the progress but said the parties remained still some distance away from what they agreed was required.
He said Mr Brown had indicated some additional money and said he agreed that it would be an ongoing engagement.
Ahern says deadline remains in place
The Minister for Foreign Affairs, Dermot Ahern, has insisted that Monday's deadline for the parties to form an executive remains in place.
Speaking on RTÉ Radio's News at One, Mr Ahern said if the parties agree, power will be devolved to the Northern Assembly on Monday and the de Hondt system of picking ministers will begin.
He said that if parties do not agree, the Assembly will be dissolved.
On the question of how long the parties would have to agree a programme for government, Mr Ahern said that was for the executive to decide.
Adams standing firm on Stormont deadline
Sinn Féin President Gerry Adams has indicated that his party would not support any proposal to delay the devolution of power from Westminster to Stormont on Monday.
Mr Adams said his party would not be prepared to see any wobble in the process from either parties or the British government. He was speaking on his way into today's meeting.
Earlier today, the Northern Ireland Secretary, Peter Hain, indicated the British government might be prepared to consider DUP proposals to allow a new administration time to bed-in.
Meanwhile, in a statement, the leaders of the four main churches in Ireland have urged all politicians to work for an immediate return of a devolved executive.
