Party leaders at Redcar and Cleveland Borough Council were due to meet last night in the latest attempt to form a ruling coalition.
Labour lost its slender majority in last week's council elections and it could still be days before agreement is reached.
Since the elections eight Independent councillors have united to form the East Cleveland, Eston and Marske Independents.
Their first leader, Councillor Steve Kay, said Eston councillor Ann Higgins had been appointed deputy leader.
George Dunning has been named leader of the Labour group, replacing former council leader David Walsh who lost his seat.
Councillor Keith Pudney was elected as deputy leader.
The four party leaders, including Chris Abbot for the Liberal Democrats and Vera Moody for the Conservatives, met on Tuesday to discuss the possibility of forming an all-party executive.
All the parties spent much of yesterday in discussions before the leaders returned to the negotiating table last night.
However the state of the parties means that there is likely to be a lot of hard bargaining ahead before any coalition is formed.
It will take 30 councillors to form a majority. Labour has 23 seats, the Liberal Democrats 15, Conservatives 13 and the Independents eight.
The election result represented a fall in support for Labour which won 48 seats in 1995.
It is expected that a coalition will have been formed before the council's annual meeting on Tuesday.
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