The Welsh Conservatives have said that talks with Plaid Cymru and the Liberal Democrats over a coalition government are "progressing well".
Labour emerged as the largest party after May's assembly elections, but Rhodri Morgan's party could be pushed out of power if Plaid, the Conservatives and Lib Dems formed a coalition.
The elections left Labour with 26 seats, Plaid with 15, the Conservatives with 12 and the Lib Dems with six.
"Negotiations with Plaid Cymru and the Welsh Liberal Democrats are progressing well and are continuing," said Welsh Tory party leader Nick Bourne.
"Relations between the three parties remain extremely cordial and discussions have been constructive throughout the process."
He acknowledged there was "clearly still work to be done to reach an agreement which will satisfy all three parties and provide the basis for stable government for Wales for the next four years".
But he insisted there was also "much common ground between the three parties".
"I remain confident that an agreement can be reached which will take Wales in a new and exciting direction after eight wasted years of Labour government," Bourne added.
