TOKYO, JUNE 25 -- U.S. and Japanese officials tonight said they were making progress in resolving outstanding issues in what they hoped would be the final round of unprecedented trade talks aimed at revamping the economies of the two countries.

A senior Bush administration official here, describing the talks as "cooperative" and "friendly," said the Japanese government had offered some significant improvements over proposals put forward in the past. He said, however, that the two sides are still apart on most issues at the heart of the politically charged talks, which have been underway for about a year.

The negotiators are under pressure to come up with a final report detailing changes in business practices, government spending and laws on both sides that would ease trade frictions that have soured relations. The report is being demanded by some in Congress who believe unfair Japanese business and government practices are to blame for much of the $50 billion U.S. trade deficit with Japan.

Japanese officials are eager to bring these negotiations to a successful conclusion before the Houston summit of industrial powers in two weeks, where financial and trade matters are expected to dominate and where Japan is eager to show its willingness to play a responsible international role.

Government officials on both sides said tonight that several issues remained to be resolved, including exactly how much money Japan would commit to spend over the next 10 years to improve the country's poorly maintained public facilities, such as parks, roads and sewer systems. The United States has been demanding that Japan agree to spend about $3.5 trillion as a way of spurring spending and purchases of imported goods. Japan has argued that is too much and would lead to inflationary pressures. So far, government officials have indicated they would agree to spend only about $2.9 trillion.

American negotiators, wary of what they say has been Japan's failure to live up to past agreements, are also insisting that the two continue to meet regularly and review how well commitments are implemented.

These wide-reaching negotiations, called the Structural Impediments Initiative, began last summer at the direction of President Bush and then Japanese prime minister Sosuke Uno in an effort to deal more systematically with escalating trade frictions.

Americans have charged that the Japanese economy and laws are structured in a way that keeps U.S. imports and foreign competitors out and makes Japan overly focused on producing goods instead of doing its share to consume them. The Japanese have charged that Americans do not work hard enough, save enough or adequately invest in business or education and as a result the United States is losing its competitive edge.

In April, after the talks seemed stalled, the two sides met in a crisis atmosphere and produced an interim report of proposed actions, including beefing up enforcement of Japan's antitrust laws and a promise to spend more on public works, that was widely praised by U.S. officials. A month later, however, U.S. trade officials were accusing Japan of failing to move forward on these promises. Since then, Tokyo has been coming up with proposals designed to show Japanese resolve.