Word of the possible power-sharing deal came as a top UN official said that up to 600,000 Kenyans have been forced from their homes since a dispute over who won the Dec 27 presidential election set off weeks of ethnic strife in this once prosperous East Africa country.

The violence has also killed more than 1,000 people, and the international community has been pressing Kenya's rival parties to strike a power-sharing deal in talks mediated by former UN chief Kofi Annan.

The talks have already led to a deal to try to end the violence, but finding a political solution acceptable to all sides is much tougher.

'The talks from today on will be a hardball,' said Mr Mutula Kilonzo, one of the negotiators for President Mwai Kibaki.

'We are talking about the modalities of a political settlement, which can come in different forms,' he said as talks resumed on Monday after a weekend break.

'One of them is sharing government; another one is to reform the constitution to create a strong opposition and a capable government.'

An opposition negotiator said on Friday that a power-sharing deal had been struck. But Mr Annan later called the announcement premature, although he said the two sides had made significant progress toward reaching an agreement.

Mr Annan's statement was reason for hope for many Kenyans, who have seen their country tear itself apart in recent weeks with much of the violence pitting ethnic groups against one another.

In one sign of the high hopes many here have for the talks, rangers at the Masai Maara game park in northern Kenya named a newborn baby rhinoceros Kofi Annan.

Meanwhile, Mr Kibaki announced the first stage of a program to provide free secondary education, fulfilling a key campaign promise.

He said the government had allocated US$42 million to increase the number of students in secondary education to 1.4 million, up from 1.2 million last year.

Mr Kibaki had instituted a program of free primary education during his previous term.

Opposition negotiators did not immediately respond to Monday's indication that the government would consider sharing power, and it's unclear where Mr Raila Odinga, who says the presidency was stolen from him, stands on the issue.

Speaking in English in Nairobi last week, he backed off his demand that Mr Kibaki resign or hold a new election.

But on Saturday, speaking to supporters in western Kenya in Kiswahili, the common tongue of East Africa, he said Mr Kibaki 'must step down or there must be a re-election - in this I will not be compromised.'

Then on Sunday, he again said he was prepared for 'giving and taking.' Mr Odinga's supporters, meanwhile, have applied their own pressure.

Violence in Kenya
In his stronghold in western Kenya, the epicentre of much of the violence of the past six weeks, they have threatened to burn down his farm and a large molasses factory owned by his family if he returns as anything less than president.

More violence would only sink Kenya further into a deepening hole - it has already gutted the country's once-booming economy and left its reputation as a budding democracy in tatters.

The ethnic component to the violence has also polarised Kenyans like never before. In many parts, members of some tribes have been forced to flee their homes and many people are moving to their ethnic group's historic homelands, even if they themselves had never lived there before.

'There are something like 300,000 people displaced in camps ... (and) beyond those 300,000 there are probably just as many who are not in camps who have gone back to their homelands ... or are sheltering with friends and neighbors somewhere else,' UN humanitarian chief John Holmes told reporters in Helsinki after arriving from a weekend visit to the East African country. -- AP