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Following the developments, Prime Minister Mirek Topolanek reached agreement with President Klaus to postpone their planned Friday meeting. The two agreed to meet during next week. Originally, the prime minister was meant to hand the president a list of proposed government ministers this Friday, but new negotiations may take several days, deputy leader Petr Necas has said.

The electronic toll systems company Kapsch and the transport ministry have negotiated changes to a contract on the Czech Republic's new electronic toll system that will require the company to pay 14 million crowns per day - more than 600,000 US dollars - for every day the system is not up and running as of January 2007. The system introduces electronic "gates" that tally tolls for trucks 12 tonnes and over. The company has backed the potential sanctions with a 660 million crown bank guarantee.

President Vaclav Klaus has expressed deep concern following the breakdown in talks on forming a broad coalition government in the Czech Republic: talks that collapsed earlier this week. On Wednesday the Civic Democratic Party abruptly ended negotiations with its main rival - the Social Democratic Party, with Prime Minister Mirek Topolanek saying that differences over policy issues and the make-up of the cabinet were too great to overcome.

The Czech military has signed a deal for the purchase of more than 550 new Tatra trucks.The first of the medium-sized vehicles, worth a total of 2.6 billion crowns - the equivalent of around 76 million dollars - will be delivered next year. In 2007, the army will receive 27 of the trucks, the last will arrive by 2009. Previously, it appeared the deal might not be signed because of cuts in finances - but the government in September boosted the military's budget. The new Tatras will replace aging Praga V3Ss as well as former Soviet-built vehicles.

In reaction, Christian Democrat leader Jiri Cunek has indicated a willingness by his party to take part in negotiations on a three-party government, a shift in stance after previously pushing strongly for the inclusion of the Social Democrats in government.

The Greens, headed by Martin Bursik, meanwhile, have said they will address the question of talks after meeting with representatives of both the Civic and Christian Democratic parties on Sunday.

The results of a new poll released by the STEM agency have revealed that if elections were held today the three-party coalition proposed by the right-of-centre Civic Democrats would gain a clear majority in the lower house: 118 seats. The survey suggests that the Civic Democrats would win 83, the Social Democrats 52, the Communist Party 30, the Green Party 22, and the Christian Democrats 13. The difference in voter support between the Civic and Social Democrats, say analysts, has narrowed since the beginning of December.

President Vaclav Klaus has signed a bill increasing the 2006 state budget deficit by about ten billion crowns that are needed to pay out pensions, and a bill postponing new sick leave benefits validity until 2008. The lower house passed the bill on the increase in this year's budget deficit on December 12th. Labour and Social Affairs Minister Petr Necas and Finance Minister Vlastimil Tlusty said that the pension system would have been otherwise short of some 10 billion crowns this month. The 2006 budget deficit will increase to almost 84 billion crowns from the originally planned 74 billion.

Meanwhile, the Civic Democrats have proposed returning to previous negotiations on a three-party coalition made up of the Civic Democrats, the Christian Democrats, and the Greens. The idea has now been revived in a fresh bid to form a viable government. At a press conference on Friday Prime Minister Topolanek said he was confident such a government - one backing essential reforms - had a chance of finding support in the lower house. He added that the three-party coalition concept had not been tested in a vote of confidence.

Civic Democrats, like the prime minister and the minister for regional development, have noted that that the government would need to be backed by a number of what they have called "constructively-minded" Social Democrats in order to pass in a confidence vote.

The finance ministry has announced that the number of casinos operating in the Czech Republic will be cut by 30 percent from the start of next year as part of a clampdown on the sector - the ministry made the announcement on Thursday. In a news release the ministry stated that it had cancelled authorisation for two firms, which will result in the closing of some 52 sites. According to the report, that will leave 129 casinos in operation.

The ministry refrained from naming the two casino companies that will have their clearance rescinded, or the reasons for the move, but a clampdown on the sector has been expected since 2004. That year in August, a grenade attack on an Israeli-owned casino in the centre of Prague wounded eighteen people.

Reacting to the latest developments President Klaus said on Thursday that Prime Minister Topolanek could give up his chance to form a government, opening the way for someone else to be entrusted with the task. The second chance at forming a governments ends with a confidence vote, Mr. Klaus said. If Mirek Topolanek should decide not to see it through I would search for a different solution, find a different candidate, the president said. The Civic Democratic Party said this was highly improbable.