FINE Gael looks set to throw Labour a local and European election lifeline by proposing a vote transfer pact, the Irish Independent has learned.
The move would be a "clear message" that the Coalition intends to serve a second term in office.
While no formal arrangement has been put in place yet, ministers believe a vote pact will be agreed in the coming weeks.
"We did it in the last general election, we've done it in the local and European elections prior to that, it worked out very well for us in past elections," he said.
"We're part of a Government that's getting on very well -- both parties. The Taoiseach and Tanaiste are getting on very well," he added.
Another senior Fine Gael strategist said a pact in the local elections, to be held next May in conjunction with the European elections, would be important if the Coalition wanted to secure a second term in government.
"Fine Gael could not turn around now and say to voters: 'Transfer to who you like.' It would send out the completely wrong signal," the source added.
However, Labour is expected to approach such a proposal with more caution, given its poor ratings in the polls.
Labour figures are desperately hoping that the recent bailout exit and positive jobs figures will save the party from haemorrhaging dozens of seats.
A raft of sitting candidates in both the European and local elections are privately conceding that they are at serious risk of losing their seats.
"If a pact meant we'd benefit from transfers from Fine Gael, I don't see how we could turn it down," a Labour strategist told the Irish Independent.
"However, we'd have to make sure that it would work for us and not be seen negatively in the eyes of voters."
Labour minister Jan O'Sullivan said she believed the recent positive jobs figures could prove vitally important to her party in May's elections.
"I would hope by the time the local and European elections come around, that the public will have, I suppose, a sense that there is light around at the end of the tunnel," she said.