He said that the "final decision" on whether the judges would be reinstated would be reached during the second day of talks.
Time limit
The PML-N and PPP last month formed an alliance to push through a parliamentary resolution to reinstate dozens of judges forced out by Pervez Musharraf, Pakistan's president, in November last year.
But the dispute between the parties resurfaced when the PPP insisted the reinstatement of the judges, including Iftikhar Muhammad Chaudhry, the former chief justice, be done via a constitutional package that would include plans for judicial reforms.
Sharif's Pakistan Muslim League-Nawaz (PML-N) insists on adhering to the system agreed upon in March and a 30-day time limit for the judges to resume their jobs.
Kamal Hyder, Al Jazeera's correspondent in the Pakistani capital Islamabad, said there were "serious differences" after the coalition held a landmark meeting over a month ago in which they agreed to reinstate the judges through an act of parliament.
"Nawaz [Sharif is trying] ... to avert a major crisis, the first test of the coalition government," he said.
"A lot of analysts are saying that he may be willing to give Zardari more time to resolve the crisis as amicably as possible, but that is going to be a tall order.
"There are reservations, and people are waiting to see whether the coalition will carry on or break apart."
Constitutional changes
Party sources said the two sides have agreed on the text of the resolution, but the PPP was still pressing for constitutional changes.
"In addition to the agreement on the resolution, we have to work out modalities for implementing that resolution in line with the constitutional requirements," Farhatullah Babar, a spokesman fo the PPP, told AFP before Wednesday's talks.
The Pakistani legal community and a number of political parties that boycotted the general elections on February 18 are threatening to launch a protest movement if the judges are not restored.
The PPP won a majority of seats in the 342-member national assembly, or lower house of parliament, but not enough to form a government on its own.
The polls, however, dealt a crippling blow to Musharraf's supporters.
Sharif, whose PML-N secured the second largest number of seats in the polls, said his party had won a mandate from the people for its stand for the restoration of judges.