Scottish Secretary Donald Dewar and Jim Wallace and their negotiating teams are sitting round the table in Edinburgh.

BBC Scotland Political Editor Brian Taylor says he does not expect a breakthrough on Monday and that the talks are likely to continue into the week.

Over the weekend there were some signs of friction between the two sides, as they began informal moves towards negotiations for a power-sharing administration in the new parliament.

BBC Scotland political correspondent Kenny MacIntyre discusses the talks

The main sticking point was the Lib Dems' insistence that Labour drops tuition fees for students.

Labour won the largest number of seats in Thursday's election, but fell short of an overall majority.

Mr Dewar has made it clear he wants a coalition agreement before the parliament meets on Wednesday.

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"I think we want to make progress and we want to make progress within a short timescale," he said.

"We are nine short of a majority. It is important that we have stable government."

Both parties have said they must agree a programme of policies capable of sustaining a coalition through the first term of the parliament.

Speaking on BBC Radio 4's Today programme, Scottish Office minister Sam Galbraith echoed Mr Dewar.

He said: "The system was designed to make it very difficult for anyone to obtain overall control and that's what happened.

"It's now our duty to the people to try to form a coalition so they so they can have stable strong government to take us forward."

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Labour Scottish Home Affairs Minister Henry McLeish has also stressed his party wanted "an effective coalition" to benefit the long-term interests of Scotland.

But other Labour Members of the Scottish Parliament would prefer a minority government.

John McAllion MSP said a coalition would lead to politics being done behind closed doors.

"A minority Labour administration is not only possible but it is viable, given that there's no practical alternative to it in the parliament," he said.

Despite Labour's eagerness to sew up a quick deal the Scottish Liberal Democrats have said they are in no hurry.

The party has appointed a negotiating team of seven which met ahead of the leaders' talks on Monday afternoon. It has indicated talks could last up to a month.

It is believed the Lib Dems will insist that Labour scrap university tuition fees as part of the price for coalition.

Michael Moore: "A majority wants the fees abolished"

The party's campaign manager Michael Moore said: "Tuition fees was a big part of our manifesto, and Jim Wallace made it very clear throughout the campaign that we wish to be party of the majority that wants to see an end to those tuition fees."

But Labour sources have indicated that the basis for any negotiations will be the party's manifesto, warning that its education plans could be threatened if tuition fees were scrapped at a cost of �40m.

Wednesday is swearing-in day for all members of the new Scottish Parliament before a secret ballot for the presiding officer and his two deputies.

The BBC's John Pienaar: "Donald Dewar is under pressure"

Thursday is scheduled to be the day when the parliament elects the first minister, likely to be Mr Dewar if an agreement is reached.

The final deadline for appointing a first minister is 3 June.

Lord Steel has announced his intention to stand for the post of presiding officer in the parliament.