As Annan intensifies mediation, opposition party says it favours two-year arrangement.
How can Kenya resolve the crisis over the elections?
Annan, the former secretary-general of the UN, has led efforts to end the turmoil triggered by disputed presidential elections in December.
At least 1,000 people have died in inter-tribal unrest which has also uprooted 300,000 people.
Opposition leader Raila Odinga argues that the elections were rigged to allow Mwai Kibaki, the president, to regain his seat.
After the adjournment of talks on Thursday, George Bush, the US president, said he was sending Condoleezza Rice, the secretary of state, to Kenya to also assist in the peace talks.
Nasser Ega-Musa, Annan’s spokesman, said of the week’s negotiations, which have been behind closed doors outside the capital, Nairobi: “He will speak to the press at 5pm (1400 GMT) on Friday to outline what was agreed in 48 hours of discussions.
“Mr Annan will make available the text of the agreement signed today between the parties. The talks will resume on Monday morning in Nairobi.”
A source from one party, who asked not to be identified, said the talks had ended in acrimony and the negotiators were flying back to the city to consult their bosses.
Martha Karua, the justice minister and the top government negotiator, said on her return to Nairobi: “Optimism is not the same as reality, but we are making progress.”
Government negotiator Mutula Kilonzo said: “The two parties agreed to write a new constitution.”
The two parties are also expected to set up a South African-style truth, justice and reconciliation commission to investigate abuses including ethnic attacks and the killing of protesters by police.
Bush said in a speech in Washington before an Africa trip that begins on Friday: “In Kenya, we are backing the efforts of former UN secretary-general Kofi Annan to end the crisis.
“And when we are on the continent, I have asked Condi Rice to travel to Kenya to support the work of the former secretary-general and to deliver a message directly to Kenya’s leaders,” he said.
“There must be an immediate halt to violence, there must be justice for the victims of abuse, and there must be a full return to democracy.”
Various Western nations have threatened travel bans or freezing of assets against guilty parties, and have also said that anyone derailing the Annan talks will face “consequences”.
The post-election turmoil has shocked locals, neighbouring states and world powers alike, crippling Kenya‘s tourism industry and denting one of Africa‘s most promising economies.