British and EU negotiators worked late into the night into Thursday in the hopes of presenting a last-minute Brexit deal to leaders meeting for a crunch European summit.

Both sides said they were close to finding a basis for a treaty to ensure Britain heads for a managed withdrawal from the European bloc it has been part of for nearly half a century.

But officials had to iron out details on how British-ruled Northern Ireland would remain under the European VAT regime.

EU negotiator Michel Barnier said simply that there had been "good progress, and work is ongoing" as he briefed a late-night gathering of leading MEPs on the eve of the summit.

But other European sources warned it was not a done deal. They suggested Johnson was struggling to win the support of his allies from Northern Ireland's loyalist Democratic Unionist Party (DUP).

One EU source said the putative agreement "is politically fragile in London". But Downing Street denied reports the DUP would be the problem and said some details remain to be worked out in Brussels.

"We're almost there," one European official said, adding: "Everything is resolved except the application of VAT in Northern Ireland."

European officials close to the talks said a deal was unlikely overnight, but that EU ambassadors would meet early Thursday before the 28 EU leaders arrive for their two-day European Council summit.

There was scepticism in Brussels that a final legal text could be completed before the end of the summit, but leaders may give political approval first to open the way for a binding, legal agreement to be finalised in the weeks to come.

Meanwhile, the leaders were hoping that the summit could rise above the Brexit mire and focus also on a fractious EU budget debate, bids by North Macedonia and Albania to start talks to join the bloc, and the crisis in relations with Turkey.

- A deal to avoid 'chaos' -

European leaders hoped to decide whether to give the go-ahead to officials to draw up a final withdrawal treaty with Britain.

"The basic foundations of an agreement are ready and in theory ... we could accept this deal with Great Britain and avoid the chaos and the misfortune linked to an uncontrolled, chaotic exit," Donald Tusk, president of the European Council, said on Poland's TVN24 news.

Johnson told his cabinet there was "a chance of securing a good deal but we are not there yet and there remain outstanding issues," a Downing Street spokesman said.

Irish leader Leo Varadkar, while positive about an outcome, suggested it might take to "the end of this month" to reach a final agreement.

- 'Committed to leaving' -

The two-day EU summit is due to begin late Thursday, but the Brexit issue could be delayed to Friday if the deal's text needs more work.

Johnson has promised to take the UK out of the European Union on October 31, with or without a divorce agreement to maintain orderly economic ties with its former partners.

A British government audit, published Wednesday, added weight to fears of a economic breakdown in the event of a "no deal" exit, forecasting a 45-65 percent cut in cross-Channel trade for up to a year.

Against this background, Britain's Brexit Minister Stephen Barclay insisted: "We're committed to leaving... on October 31. We think the best way of doing that is with a deal, to leave in a smooth and orderly way."

More intense talks resumed this week after Britain softened its stance on the customs status of its province Northern Ireland in order to clinch an accord before the summit.

An EU diplomatic source told AFP that, under the deal being negotiated, Northern Ireland would remain in the EU's value-added tax (VAT) area to ensure smooth trade with EU member Ireland.

However, that would require a new mechanism because the UK will be operating with its own VAT rules.afp