Diplomatic sources say negotiations in Islamabad may begin next week, though no formal agreement is in place.
Pakistan's military leadership has been attempting to broker negotiations between the US and Iran after the White House confirmed that Pakistan's army chief, Asim Munir, had a phonecall with Donald Trump on Sunday to discuss the conflict.
Diplomatic sources said the US and Iran could meet for negotiations in Islamabad as early as this week to discuss an end to the war which began almost a month ago.
It was emphasised that Islamabad had yet to be officially confirmed as the venue for any peace talks, which neither side has formally agreed to so far. Trump's Middle East envoy, Steve Witkoff, is believed to be preparing to travel to Islamabad but there was no confirmation that anyone from the Iranian side would be in attendance.
Pakistani sources said that the US vice-president, JD Vance, is being put forward as a probable chief negotiator from the US side if talks do go ahead, rather than Witkoff or Trump's son-in-law, Jared Kushner, who led the nuclear negotiations with Iran before the war.
After the phonecall between Trump and Munir, Pakistan's prime minister, Muhammad Shehbaz Sharif, spoke to the Iranian president, Masoud Pezeshkian, on Monday. According to an official readout of the call, they "agreed on the urgent need for de-escalation, dialogue and diplomacy".
Sources said that Iran's parliamentary speaker, Mohammad Bagher Ghalibaf, was the most likely to lead any talks from the Iranian side. However, Ghalibaf has so far dismissed reports of talks between the two sides as "fake news".
An Iranian diplomatic source said that from the Iranian side there was "zero trust" in Washington and that they would not accept Witkoff and Kushner as negotiators for any discussions.
Negotiations between the US and Iran were still happening when the US began its bombing campaign. The Iranian regime has since viewed those negotiations as an attempt by the Trump administration to deceive Iran into thinking it wanted a diplomatic solution while it planned to attack.
"With the previous negotiating team, there's no chance," said one diplomatic source. "The Iranian side regards the request for negotiations as another round of deception for the US-Israeli regime to find out a loophole and synopsis to aggravate the strikes again."
On Monday, Trump gave the strongest indication yet that he would be willing to halt US strikes after claiming that "strong talks" were being held between Iranian officials and Witkoff and Kushner. "We have had very, very strong talks. We'll see where they lead. We have major points of agreement, I would say, almost all points of agreement," Trump told reporters.
The US president has now given a five-day deadline to an ultimatum he gave over the weekend, threatening to "obliterate" Iran's power plants and energy infrastructure if they did not reopen the strait of Hormuz, the crucial shipping route currently being blockaded by Iran's military. Trump's announcement of talks helped to boost markets as it brought oil prices sharply down to below $100 (£75) a barrel, the lowest in days.
The Iranians have so far denied that any direct talks are taking place with the Trump administration but claimed that "certain friendly states" had been conveying messages from the US regarding negotiations.
Diplomatic sources have said Pakistan, Oman, Turkey and Egypt have been among the countries communicating with US and Iranian officials in an attempt to bring hostilities to an end.
Pakistan's powerful army chief enjoys a close relationship with Trump, who he has visited twice in Washington and was described by the US as my "favourite field marshal". While Pakistan and Iran have complex ties, Pakistan is home to the second-largest population of Shia Muslims after Iran.
Pakistan also has a close relationship with the Gulf countries, which have borne the brunt of Iran's retaliatory strikes, and has a freshly signed defence pact with Saudi Arabia.
Pakistan is one of the South Asian countries already suffering from severe economic fallout as a result of the war. Most of the country's oil and gas comes through the strait of Hormuz and it has been facing costly shortages and fuel price rises.
A statement by Pakistan's foreign ministry said: "If the parties desire, Islamabad is always willing to host talks. It has consistently advocated for dialogue and diplomacy to promote peace and stability in the region."
The White House declined to comment directly on the reports of peace talks to be held in Islamabad. "These are sensitive diplomatic discussions and the United States will not negotiate through the news media," said a spokesperson.