The Secretary General of the Arab League, Amr Moussa, said on Wednesday that significant progress had been made in his efforts to diffuse political and sectarian in-fighting in Lebanon.
Moussa, who arrived in Beirut on Tuesday amid continuing anti-government street protests by the pro-Syrian Hezbollah and its allies, met with several of the major players in the region, including Lebanese Prime Minister Fuad Saniora, Michel Aoun - a Christian Opposition leader and Hezbollah ally - and Amin Gemayel, the former Lebanese President.
After the talks Moussa said all sides needed to compromise to reach a solution to the crisis.
"No progress can be made unless all parties reach a common ground that includes gains and maybe concessions," he said
The Shiite Muslim group Hezbollah and its allies are threatening to bring down the Saniora government unless it is reformed to give them a greater share of power.
Saniora, who is backed by anti-Syrian politicians who dominate parliament, has so far refused to back down.
Earlier on Wednesday he approved plans for the creation of a UN-backed international tribunal that would seek to try suspects in the 2005 assassination of former Lebanese prime minister, Premier Rafik Hariri.
The tribunal is fiercely opposed by Hezbollah as the UN probe believes several Lebanese pro-Syrian generals are among those involved in the incident.
Six ministers from the Shiite Muslim group and its allies resigned from the cabinet in November because they were not granted effective veto power.
The pro-government factions and the United States have accused Hezbollah's two main sponsors - Syria and Iran - of seeking to overthrow the government.
Hezbollah retorts that Saniora acts on behalf of Washington.