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Cloaked in secrecy, make-or-break talks between the federal government and its biggest union went down to the wire in Ottawa last night in efforts to avert a crippling shutdown of the public sector.

As of midnight, 120,000 members of the Public Service Alliance of Canada -- four-fifths its total membership -- were in a legal strike position, after seven months of stalled negotiations that foundered chiefly over wage goals.

After weeks of rotating strikes, the union had slated a full-scale walkout for last Thursday.

But three days before the deadline, federal Labour Minister Joe Fontana and Canadian Labour Congress secretary-treasurer Hassan Yussuff persuaded PSAC and the Treasury Board to resume negotiations that stretched through the Thanksgiving weekend.

The talks put the strike on hold until today. A media blackout was in effect, with even the locations of the two sets of talks undisclosed.

Earlier, however, PSAC president Nycole Turmel voiced hope of a breakthrough.

"I am still optimistic that we will get a settlement, but I believe that government has to show more willingness to settle this," she said.

Part of the difficulty in reaching a deal, Ms Turmel said, stemmed from a top-down Treasury Board management style in which its negotiators have to clear all union proposals with superiors before signing off on them. The PSAC reps, she said, have a freer hand.

During the on-off negotiations that began in March, the government offered the union a 6-per-cent wage increase over three years.

PSAC wants a 9-per-cent increase, a figure endorsed by a conciliation board drawn from both sides.

The other main stumbling block is a wage gap between PSAC's 11,000 blue-collar workers -- chiefly electricians, cleaners and heating plant operators -- and their peers in the private sector.

The first sign of unrest came during the summer, when roughly 4,800 Parks Canada employees launched a series of rotating strikes. Among other things, that disruption left some boat owners stranded when canal-lock operators walked off the job.

During the past month, many of the Canada Revenue Agency's 24,000 staff staged similar work action.

The Treasury Board, however, has taken an uncompromising line, despite having a "compensation reserve" of $1.6-billion, earmarked in earlier budget projections to cover wage increases.

What's chiefly been fuelling Ottawa's stance, labour analysts believe, is a desire to convey the political message that after a string of unwelcome fiscal scandals an era of tough-minded money management has finally arrived.

The last major PSAC strike was in 1991 and ended when Brian Mulroney's Conservative government legislated the union back to work, imposing a 3-per-cent wage increase phased in over three years.

Treasury Board President Reg Alcock recently let it be known that a similar law had been drafted and would be implemented within days of a PSAC strike.