European Union Council President Donald Tusk says the 27 EU leaders have agreed to start fine-tuning a common position for negotiations on a future trade deal with Britain once it leaves the bloc in 2019.
By starting work on this now, Britain and the EU 27 could start such trade negotiations immediately if a December summit agrees that enough progress has been made on three key divorce issues - Britain's exit bill, the border between Ireland and Northern Ireland and citizens' rights.
Tusk said in a Twitter message: "Leaders green-light internal EU27 preparations for 2nd phase."
He said later a press conference: "My impression is that the reports of the deadlock between the EU and the UK have been exaggerated. While progress has not been sufficient, it doesn't mean there has been no progress at all.
"The negotiations go on and we will continue to approach them positively and constructively. I hope that we will be able to move to the second phase of our talks in December."
British Prime Minister Theresa May acknowledged that Brexit negotiations "still have some way to go," but said she is optimistic about a positive outcome.
"I am ambitious and positive for Britain's future and for these negotiations - but I know we still have some way to go," May said.
"We must work together to get to an outcome that we can stand behind and that works for all our people."
May also stressed that while she was working towards a "good deal," "it would be irresponsible" not to look at "all eventualities," including the possibility of talks failing.
Despite the sense of urgency from both sides, and calls to accelerate the negotiations, they remain bogged down on preliminary issues. Those include the exact sum of Britain's divorce bill - which the EU estimates at 60-100 billion euros ($A89-$A153 billion), compared with a possible 20 billion euro offer from London - the rights of citizens affected by Brexit, and the status of the Northern Ireland-Ireland border.
