Mediators trying to unlock Kenya's political impasse said Thursday that progress had been made in the talks aimed at creating the position of prime minister that does not exist according to the current constitution.

A statement from the chief mediator, Kofi Annan said he was pleased by the progress made by the sub-committee which has been drawing up options to transform an eventual political agreement into a legal framework acceptable to both sides.

"Facilitator Hans Corell described considerable progress made in the working group and outlined a joint proposal that had been largely agreed on the governance structure, the only outstanding issue under Agenda Item 3 (how to overcome the current political crisis)," the statement said.

Annan who is leading the talks said there had been "progress" but no deal yet. "I'm beginning to see light at the end of the tunnel," he said.

The creation of a prime minister post is being discussed in negotiations to resolve the crisis over Kenya's disputed poll which has dented the image of the east African as an oasis of stability in the region.

The post is one option in the talks between the government and opposition to seek a power-sharing deal. It's also being backed by members of the international community.

At least 1,000 people have died in violence while 350,000 others have been displaced since the December election, in which the opposition alleges fraud.

President Mwai Kibaki's government and the opposition Orange Democratic Movement (ODM) have already agreed in principle on a grand coalition.

The mediators suspended talks on Thursday to allow the negotiating teams consult their leaders on the draft joint proposal.

"The negotiating team suspended their session for today (Thursday) to allow time to consult with their constituents on the draft joint proposal. The Legal Working Group will meet tomorrow ( Friday) morning at 8:30 (GMT 0530) to try and conclude their work, and then will report to the full negotiating team at its 15th session beginning at 10:00 a.m. (GMT 0700)," Annan said.

The development came as an international think tank warned that further violence could erupt unless a solution to Kenya's political crisis were found urgently.

The International Crisis Group (ICG) warned in its latest report on Kenya that calm has partly returned but the situation remains highly volatile as armed groups on both the opposition and government sides are mobilizing for fresh attacks.

The report said the proscribed Mungiki sect swung into action moments after the president was re-elected beheading and mutilating members of rival communities in Nairobi slums.

"The current uneasy calm in Kenya should not be misunderstood as a return to normalcy. The protracted political crisis has deep roots and could easily lead to renewed extreme violence," the Brussels-based think tank warned.

The ICG report called for legal, electoral and constitutional reforms and for aid to be conditional on a peaceful result.