Amr Moussa, the Arab League chief, has not succeeded in brokering a deal to resolve Lebanon's political crisis.
At a press conference, he reported progress in his mediation but said that more talks were required and he might have to return to Beirut to continue his discussions with government and opposition leaders to agree on a package.
Moussa, who arrived in Beirut on Tuesday, has been shuttling between rival Lebanese leaders in an effort to end the crisis which worsened after the Hezbollah-led opposition took to the streets to press its demand for veto power in the government of Fouad Siniora, the prime minister.
He said the parties had agreed on a cabinet of national unity, which would also include opposition members - Hezbollah, the Free Patriotic Movement and Amal - but they wanted to discuss "guarantees" to make it work.
Abdullah Bushabib, the former Lebanese ambassador to the US, told Al Jazeera: "Amr Moussa is a very talented diplomat and he knows he also needs an agreement on a regional level.
"Every issue is connected to an outside [country] but all the problems are converging to Lebanon."
Illegitimate
The opposition has declared Siniora's cabinet illegitimate and has been staging a round-the-clock protest in central Beirut since December 1.
The anti-Syrian leaders who control the cabinet have so far refused to yield. They say giving in would allow more Syrian and Iranian influence.
Lebanese political sources said the centrepiece of Moussa's proposals was expanding Siniora's depleted cabinet from its original number of 24 to 30 ministers.
In the proposed expansion, the majority coalition would have 19 ministers, the opposition 10 and there would be one neutral minister.
The sources said the main stumbling block was who would name the neutral minister, Siniora or the opposition.
Early elections
Moussa's talks have also touched on other issues - early presidential and parliamentary elections, and the passage of a law setting up an international court to try suspected killers of Rafik al-Hariri, the former prime minister.
Siniora has accused Hezbollah of trying to stage a coup after the war with Israel during July and August and there are fears that the standoff could degenerate into sectarian violence in a country still trying to rebuild after the 1975-90 civil war.
Six opposition ministers resigned last week after talks on a unity government collapsed.