A DEADLOCK between John Swinney and the UK Treasury over a new financial settlement for Scotland continued tonight, as it emerged SNP ministers are preparing to submit detailed proposals for a last-minute deal.

Senior Scottish Government sources said that no significant progress had been made in the latest round of talks over the fiscal framework in Edinburgh, with the outlook for a breakthrough described as "gloomy".

The SNP is working on its own plan, which is based on John Swinney's preferred method of calculating the settlement but that sources insisted would address UK Government concerns, which will be put to the Treasury within days.

However, there is no optimism that the deal will be accepted, with Scottish Government sources saying there had been little sign that George Osborne's representatives were willing to budge.

Mr Swinney, the finance secretary, met with Greg Hands, the Chief Secretary to the Treasury, this evening. Further talks will take place although the Scottish Government is sticking to a deadline of Friday.

The fiscal framework will calculate the amount deducted from Scotland's block grant should new powers over income tax and welfare come under the control of Holyrood, as recommended by The Smith Commission and legislated for in the Scotland Bill.

Mr Swinney and Nicola Sturgeon have repeatedly said they are ready the scupper the Bill should they not secure a deal they consider fair. They have warned that current proposals would leave Scotland billions of pounds a year worse off, although David Mundell, the Scottish Secretary, has accused Mr Swinney of making "ludicrous" demands.

Mr Swinney said: "We are working very hard to secure an agreement, but we should not underestimate the scale of the issues that we have to overcome. The Scottish Government will put forward new proposals in light of today’s discussion which will be rooted in the Smith Commission and ensure that neither Scotland, nor the UK, will be better or worse off as a consequence of the devolution of new powers. I am determined to get an agreement, but only one that is fair to Scotland."

It has emerged that key documents relating to the negotiations will be published before the Scottish Parliament dissolves in late March, allowing scrutiny of a process that has so far taken place behind closed doors.

Meanwhile, No 10 dismissed the SNP assertion that the UK Government was intent on "embedding systemic cuts" to Scotland's revenue in future years because of the position it was adopting in the intergovernmental talks.

David Cameron's spokesman said: "We see the fiscal framework as being a way of ensuring that we get fairness for both the people in Scotland and across the rest of the UK. We want to reach an agreement, which works for Scotland as much as it does for the rest of the UK and we will stay at the table in order that we get there."

Asked if the Nationalist assertion was correct that Whitehall's position in the talks would leave Scotland out of pocket by several billions of pounds over the next decade, he replied: "I would disagree with that. This is about ensuring we get a position of fairness for the people of Scotland and for the rest of the UK."