ISLAMABAD, July 2: The Defence Committee of the Cabinet will meet on Tuesday to discuss the revised terms of engagement with the United States and a new agreement on Nato transit routes amid expectations of a breakthrough in ties with Washington.

Prime Minister Raja Pervez Ashraf will chair the highest forum for civilmilitary coordination on national security for the first time. The meeting is likely to take the controversial decision of reopening of Nato supply routes suspended after an attack on the Salala post last year in which 24 Pakistani troops lost their lives.

The weekend visit by a high-level US delegation led by Deputy Secretary of State Thomas Nides and also including Isaf Commander Gen Allen, who was here for second time in four days, and a telephonic conversation between Prime Minister Ashraf and Secretary of State Hillary Clinton generated hopes of the two countries striking a deal on Nato routes and other contentious issues weighing down their relationship.

The ground for progress was, however, set by last week`s meeting between Army chief Gen Ashfaq Parvez Kayani and Gen Allen after which the two issued an unprecedented joint statement virtually declaring resumption of troubled military ties that were at theheart of the recent strains.

Ambassador to the US Sherry Rehman has returned to Islamabad to attend the crucial DCC meeting.

Although Foreign Office spokesman Moazzam Khan has kept insisting that no final decision had been taken yet, it is obvious that the two sides have broadly agreed on major issues.

Even the composition of the US delegation showed that the two sides were discussing more than just reopening of ground supply routes a key priority for the US that has spent almost $2.1 billion to ferry supplies and equipment in and out of Afghanistan since November.

Details about what had been agreed during the talks were not available, but both American and Pakistani officials noted significant progress.

Sources told Dawn that the two sides had agreed to insti-tute a mechanism to prevent recurrence of a Salala-like incident. Moreover, the Americans were ready to make a statement lamenting the death of Pakistani soldiers in the border attack.

The statement meant to satisfy Pakistani demand for apology has been carefully worded in a manner that satisfies the concern of both sides.

Islamabad and Washington have also moved forward on the issue of drones and are said to be close to agreeing on an alternative mechanism for targeting militants in tribal areas. As quid pro quo the US will start releasing held payments of the Coalition Support Fund.

Mindful of strong reaction to a settlement with the US on supply routes, an official involved in negotiations said the package had been crafted in a manner that it had minimum blowback for the political and military leadership.