The Group of Seven appear to have achieved a compromise on aid to the Third World proposing "up to" 100 percent multilateral debt relief to poor nations.

Chancellor Gordon Brown had sought a complete debt write off for the world's poorest nations, but faced resistance from the United States.

Washington had objected to his proposal to use IMF gold reserves to fund the debt write off and also to create a new financing mechanism that would double aid.

"The G7 has raised the prospect of relief of up to 100 percent of multilateral debt owed to development banks and the IMF for poor countries," one of the G7 sources told Reuters on Saturday.

The apparent compromise followed occasionally angry exchanges on Friday night as the G7 finance ministers sought to iron out their differences.

Under intense pressure to deliver on promises to rid Africa of poverty by 2015, they had discussed more modest options than British finance minister Gordon Brown's plan.

Brown had wanted approval for his International Finance Facility (IFF) scheme to double aid to Africa to $100 billion a year and write off the debts of the poorest countries completely.

The plan has the backing of South Africa's Nelson Mandela who made an emotional appeal to the G7, equating the fight against poverty to the struggle against apartheid.

"Do not delay while poor people continue to suffer," the 86-year-old former political prisoner said, putting all his moral weight behind his plea. He demanded a full write-off of African debt and $50 billion extra a year in aid for the next decade.

U.S. Treasury Under Secretary John Taylor said he disagreed with the Brown plan to double existing aid by using rich countries' guarantees to raise money in the capital markets, and using gold reserves to fund a debt write-off.

"What we think is the main, major problem now is the funds are not being used effectively. We've got to demand results," Taylor said on BBC radio.

Brown was forced to rescue negotiations after it became clear that backing from Italy and Germany was fading too as its European neighbours suggested they would prefer something less ambitious than the British proposals.

The G7 comprises the United States, Japan, Germany, Britain, France, Italy and Canada.

BACK SEAT FOR OTHER ISSUES

The bulk of the meeting was devoted to the Third World but the ministers also discussed ways of reducing volatility in the oil market after prices hit record highs last October.

They were also discussing the more familiar G7 topics of currency management and economic risks.

U.S. Treasury Secretary John Snow is not attending because of a cold so there appeared little chance of ministers straying from a year-old policy statement in which they called for less volatile currency markets and greater exchange rate flexibility.

The latter point is aimed mainly at China, which sent its finance minister and central bank officials to meet G7 members.

"We are determined to move towards a flexible exchange rate, but no timetable," Chinese central bank deputy governor Li Ruogu told reporters after breakfast talks.

Beijing says it is not going to rush into altering its yuan peg to the dollar, which many say keeps the yuan artificially low and makes life unfairly difficult for other trading nations.

Brown invited India, Brazil and South Africa to London as well as China in an acknowledgement of a shift in the world economic order, and Brazilian Finance Minister Antonio Palocci said they would be seeking a permanent invite, like Russia has.

The G7 accounts for 14 percent of the world's population but two-thirds of its wealth.