European Union leaders could hand British Prime Minister Theresa May an olive branch in deadlocked Brexit negotiations next week by launching their own internal preparations for a transition to a new relationship with Britain.

Draft conclusions submitted by summit chair Donald Tusk to the 27 other EU governments made final Brussels' rejection of opening free trade talks now.

But they also but gave Mrs May hope that they would do so in December - and that, if she ups her offers on divorce terms, the EU will be ready to start talking almost right away.

The draft of conclusions which would be issued by leaders of the 27 next Friday, a day after meeting Mrs May in a full EU summit, still have to be agreed.

Envoys, including from Germany and France, objected last week to a suggestion from the EU’s chief negotiator Michel Barnier that the EU should start working on transition plans.

But EU officials noted that Mr Tusk, the European Council president, has sounded out most national leaders in recent days.

A senior EU official closely involved in the negotiations said Brussels did not expect major changes to the summit text.

The first version of the text, seen by Reuters, confirms what Mr Barnier and others have said this month: that there is not "sufficient progress" on agreeing three key elements of a withdrawal treaty for leaders to agree now to open the trade talks Mrs May wants.

But in an effort to defuse accusations in Britain about EU intransigence, the leaders would welcome progress to date on their three key issues: the rights of three million EU citizens in Britain; protecting peace in Northern Ireland from the effect of a new border on the island; and Britain's outstanding payments.

They would pledge to reassess things at their next summit in mid-December – Mr Barnier today spoke of making progress in the next two months.

And in order not to waste time once they do decide to launch talks on a post-Brexit future, they would ask Mr Barnier and their envoys to start preparing now for a transition - albeit without actually starting talking to Britain about it.

Mr Barnier and his British counterpart, Brexit Secretary David Davis, told reporters there had been some progress this week on citizens' rights and the Irish border question.

Mr Davis renewed his call for EU leaders to give a green light to trade talks next week but that has long been a forlorn hope.

Mr Barnier made clear that despite new momentum from Mrs May's concessions in a speech at Florence last month, British proposals still failed the "sufficient progress" test, notably on tens of billions of euro the EU says London owes.

Mrs May said Britain would ensure the other 27 countries did not lose out financially from Brexit in the current EU budget period to 2020 and would honour commitments - but Mr Barnier said London was failing to spell out just what it was ready to pay.

"There was no negotiation on this, but we did have technical discussions which were useful," he said.

"We are, therefore, at a deadlock on this question. This is extremely worrying for European taxpayers and those who benefit from EU policies."

Nonetheless, he offered hope: "I am still convinced that, with political will, decisive progress is within reach in the coming two months. With David Davis, we will organise several negotiating meetings between now and the end of the year."

Mrs May herself said there had been "good progress" and welcomed Mr Barnier's talk of further progress "over the coming weeks"