Powell engaged in a round of telephone diplomacy with Morocco's King Mohammad VI, Spanish Foreign Minister Ana Palacio and Moroccan Foreign Minister Mohamed Benaissa on Friday to bring about a resolution. Spain and Morocco have been locked in a heated standoff over the uninhabited islet of Perejil, known as Leila in Morocco, after Rabat sent troops to the rocky outcrop on July 11 which were evicted six days later by Madrid's forces.

"The secretary has been working very closely with the Spanish and Moroccan governments on the issues surrounding the island," State Department spokesman Richard Boucher said. "We remain hopeful that a resolution to these issues can be reached on .... the basis of returning to the status quo ante," he said.

The United States stepped in after the dispute stormed onto the international stage, dragging in Nato and the European Union, which supported Spain, while the Arab League and the six-nation Arab Gulf Cooperation Council (AGCC) backed Morocco's calls for Madrid to withdraw from the islet.

Under the US-brokered deal, Spain and Morocco would agree to remove from the island any "outposts, flags and or symbols of sovereignty", a pledge that would be tantamount to a return to the status quo before the dispute. The two countries would then follow up with ministerial-level talks to work out a lasting solution to the territorial dispute over the 13.5-hectare island.

In Washington, US officials said late on Friday that they were waiting for Rabat and Madrid to give final approval to the agreement which they said was imminent. "We are waiting to confirm details that we would hope would lead to a resolution," one senior State Department official said on condition of anonymity. - AFP