Management and union leaders at An Post were last night considering a formula designed to break the deadlock in their 10-day-old dispute.
The two sides attended the Labour Relations Commission yesterday afternoon for talks, which were continuing late last night.
The parties took a 90-minute break to reflect on the position before returning to the talks at 8.30 p.m. While neither side was prepared to go into detail, there was little optimism that an agreement was imminent.
One source said a night of "tough and difficult" talks lay ahead.
The two parties involved, An Post and the Communications Workers' Union, were not engaged in direct discussions.
Instead, the LRC was attempting, in separate talks with the two, to find a basis on which face-to-face talks could begin and the postal service could be restored.
Many areas, including Dublin city and county, are without a delivery service as a result of the dispute.
It began at the Dublin Mail Centre in Clondalkin the weekend before last, when An Post began suspending workers for refusing to carry out management instructions.
The CWU claims the company was attempting to introduce new sorting arrangements, which would have had serious implications for delivery office staff, without agreement.
An Post says the workers were being asked to carry out normal duties.
The company says 555 workers have been suspended, while a further 89 temporary staff in delivery offices have had to be let go because there is no work for them.
The union claims 750 members in total have been taken off the payroll.
The dispute has had a dramatic impact on services, as 60 per cent of the State's mail is processed at the Dublin Mail Centre. Postboxes in Dublin and other areas have been sealed, and the company is asking customers not to post mail to or from Dublin city and county, Drogheda, Navan, Bray, Dundalk, Tuam, Carrickmacross, Kells, Wicklow, Castleblayney and Greystones.
Mail posted in or to the Galway postal area is also subject to serious delay, it has warned. Inbound and outbound international mail, posted to or from anywhere in the State, is also affected and customers are advised not to post to any international destination. This includes Northern Ireland.
The Minister for Communications, Mr Dermot Ahern, is understood to be closely monitoring the situation. He has declined to intervene in the dispute, however, pointing out that he did not have a "magic wand" to resolve the row. If a resolution can be found at the LRC allowing for talks to begin, the two sides will then face the huge task of negotiating agreement on a recovery plan drawn up by An Post to stem losses of €2.5 million a month.
Talks on the plan broke down before Christmas and the CWU refused to return when the company announced it was pleading inability to pay the 3 per cent pay increase due to staff under Sustaining Progress.
It has since balloted to take industrial action on other issues, but has delayed implementing it.
