Government and rebel negotiators met Saturday in search of ways to achieve peace, but the two sides remained far apart on the key issue of a permanent truce.

The U.S.-supported rebels, known as Contras, are demanding the Sandinista government take the first steps toward returning Nicaragua to freely elected democratic rule before they sign an armistice."If we sign a permanent cease-fire without first taking steps to lead (the country back) to democracy, it would be tantamount to surrender on our part," Adolfo Calero, the top Contra negotiator, told The Associated Press in a telephone interview shortly before the start of Saturday's session.

Gen. Humberto Ortega, the Sandinista defense minister and head of the government delegation, said Friday the Sandinistas believe an agreement on a permanent truce comes first.

"The victory we should seek is a permanent cease-fire," Ortega told reporters.

But both sides expressed optimism they could reach agreement.

"We came here with faith and goodwill and we hope to find the same goodwill on the other side to reach agreement that will benefit all Nicaraguans," Calero said.

He added, however: "We have reservations to return to Costa Rica on Monday afternoon. If the negotiations are on the right track, then we could prolong our stay."

This is the first time the Sandinistas have allowed Contra leaders to come to Managua since the revolt began in November 1981. President Daniel Ortega has said 26,500 people have been slain in the conflict.

The delegations met briefly Friday night, then gathered again at the negotiating table at 9 a.m. (11 a.m. EDT) Saturday behind closed doors.

A 60-day cease-fire has been in effect since April 1.