Afghanistan election watchdog says widespread fraud invalidates thousands of votes.
That would leave the rival sides with two weeks to proceed to a run-off vote.
But sources have told Al Jazeera that Karzai and Abdullah are in coalition talks to avoid a run-off.
Al Jazeera’s James Bays, reporting from the Afghan capital, Kabul, said that a unity deal could already be coming together.
“Our sources are telling us that negotiations are much further advanced than previously thought,” Bays said.
“We understand that they have been negotiating about specific ministries that could be handed over to Abduallah – one source has said that he could get as many as 12 ministries. And that he is demanding the powerful interior ministry.”
Karzai’s camp has already criticised the ECC and some fear that the Karzai-influenced election commission may refuse to call a run-off, further delaying formation of a government.
Karzai, who had earlier proclaimed victory in the poll, is also expected to give his reaction to the ECC’s findings later on Tuesday.
A run-off would have to be held before Afghanistan’s harsh winter sets in, making security and logistical arrangements for a vote impossible.
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The ECC on Monday said that voting at 210 polling stations should be discarded, and that that decision was binding.
Preliminary results last month had showed Karzai winning the election with more than 54 per cent of the vote to Abdullah’s 28 per cent, but allegations of massive fraud prompted the ECC investigation.
Farhad Peikar, a policital analyst, told Al Jazeera that despite predictions that Karzai would win a run-off vote it might still be in his interests to make a unity deal.
“Everybody is admitting that holding second-round elections in a couple of weeks would be difficult.
“If it is postponed for next year, Karzai is aware that he could not remain in his position as the opposition would not accept any extension of his mandate. Then he would be forced to resign.”
The election deadlock has also complicated a major US review of its policy in Afghanistan, where it is fighting the Taliban.
The US is considering a request by General Stanley McChrystal, the top US and Nato ground commander, to commit an extra 40,000 troops in order to step up its operations there.
But Rahm Emanuel, the chief of staff to the US president, has suggested that the US may not commit more troops to Afghanistan until a “credible and legitimate” government is in place.