Brexit Secretary David Davis and EU chief negotiator Michel Barnier have said their latest round of talks have made progress, but significant differences remain between the two sides.
Following Theresa May's Florence speech proposing a two-year transition in which Britain will continue to pay into EU coffers after Brexit, Mr Davis said the talks in Brussels had made "decisive steps" forward.
However, both men acknowledged there were gaps between them - including on future citizens' rights which the EU is insisting must be enforced through the European Court of Justice.
Mr Barnier said the Prime Minister's speech had created a "good dynamic" for the talks.
He said: "We managed to create clarity on some points. On others, however, more work remains to be done and we are not there yet."
Mr Davis said: "We have made important progress and capitalised on the momentum created by the Prime Minister's speech.
"We are working quickly through a number of complex issues but there remain some points where further discussion and pragmatism will be required to reach an agreement."