Two European officials say EU leaders are offering to allow Britain to extend Brexit until October 31 and are awaiting the U.K.'s response.
The officials spoke to The Associated Press on condition of anonymity to discuss the closed-door negotiations.
British Prime Minister Theresa May and European Council President Donald Tusk walk together during a break in the European Union leaders summit in Valletta, Malta, February 3, 2017. The Prime Minister went to Europe this week to seek a deferral until June 30 but the EU27 gave her until October 31 instead - not an act of generosity but proof that they don't believe Mrs May can win Parliament's support for the Withdrawal Agreement.
The late-night agreement means Britain will not crash out of the bloc on Friday and gives May more than the three months she had asked for to build a parliamentary majority behind the withdrawal treaty she negotiated with the European Union past year.
"The government will have to compromise", he said, warning that any agreement would have to be entrenched because Labour has no idea who will replace May. Some European leaders favored a longer extension, while French President Emmanuel Macron was wary of anything but a very short delay.
Continuing, the left-wing mayor said, "And what Theresa May should have done is first work out what sort of relationship we want with the European Union, what will the future terms of that deal be, and once we knew that, once we were comfortable with that, then serve the notice to quit with a maximum of two years and we could have left before then".
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"Please don't waste this time", European Council President Donald Tusk told the United Kingdom government in a news conference on Thursday, after eight hours of talks on the matter.
"We will have a Brexit with a deal".
The Confederation of British Industry said the Brexit extension means an "imminent economic crisis" has been averted for now.
British Prime Minister Theresa May again called on Parliament to approve her Brexit deal.
Many Conservative Party legislators prefer that May resign now and allow a new leader take charge of Brexit.
The talks, which both sides call serious and constructive, are expected to continue in the coming week.
"Nothing is decided", Mr Macron said, insisting on "clarity" from Mrs May about what Britain wants. Irish Taoiseach (prime minister) Leo Varadkar also warned that Britain must now hold European elections in May, or leave on 1 June without a deal.