Portugal and Indonesia have agreed to discuss granting the troubled Indonesian province of East Timor autonomy and to further involve East Timor activists in the talks, foreign ministers said.

The agreement was announced Thursday after two days of talks brokered by U.N. Secretary-General Kofi Annan. Portugal, the province's colonial master until 1975, previously backed nothing short of self-determination for East Timor.Indonesia had insisted that it should be responsible for getting East Timorese input on the talks and choosing which East Timorese activists to consult.

But Thursday's agreement assigned that task to Annan, who said he would seek input from East Timorese leaders including Jose Ramos Horta, a leading independence activist and co-winner of the 1996 Nobel Peace Prize. Horta, who lives in the Portuguese capital of Lisbon, has been a longtime foe of Indonesia.

Annan described the deal as "progress," but said it was not a major breakthrough.

"We have moved from principled positions to common ground," said Portuguese Foreign Minister Jaime Gama. The agreement calls for a solution by the end of this year.

No mention was made of East Timorese demands for a referendum on independence among the province's 800,000 people - a proposal previously backed by Portugal.