A settlement to end the four-month-old hunger strike by Irish nationalist prisoners in British-ruled Northern Ireland has been drafted by a mediating Irish Catholic church group following significant concessions by British officials and the protesting prisoners in secret, around-the-clock negotiations.

The Rish Commission for Justice and Peace of the Roman Catholic Church in Ireland has proposed making the draft public "within 24 hours in the form of a commission statement to be responded to by both sides," said one source close to the commission.

A positive public response by the British government and the prisoners could then end the hunger strike in time to prevent the death of Joe McDonnell, 30, a convicted Irish nationalist terrorist who has refused food for 59 days.

But British and Irish government sources with knowledge of the negotiate directly with the prisoners or to agree formally to changes in the prison regime until after the hunger strike ends.

The commission's five-man mediation team discussed the proposed settlement in meetings in Belfast today with relatives and Irish nationalist supporters of the hunger strikers and leaders of Provisional Sinn Fein, the political arm of the outlawed Provisional Irish Republican Army. The mediators met again tonight with British government officials in Belfast. A series of meetings at the nearby Maze Prison over the weekend with the eight current hunger strikers and the paramilitary leader of more than 400 other convicted Irish nationalists ended early this morning.

The proposed settlement includes concessions by British officials that would allow the prisoners to wear their own clothes at all times and have more freedom of choice in prison activities and association with other inmates, according to sources close to the negotiations. It also would embody concessions publicly made by the Irish nationalist prisoners over the weekend that they were no longer seeking special political prisoner status. They said in a statement on their behalf that they were now seeking changes in conditions for all prisoners in Northern Ireland without challenging or eroding the government's authority in the prison.

Informed sources pointed to movement on several key issues by the Catholic Irish nationalist prisoners in their weekend statement, particularly their contention that they are not seeking to gain control or free run of the prisoners, including several hundred convicted Protestant loyalist terrorists also serving sentences in the Maze. These sources noted that a statement on behalf of the Protestant prisoners this weekend asked for similar changes in the prison regime for themselves.

The protesting prisoners' five specific demands have been to wear their own clothes, be exempted from prison work, associate freely with other nationalist prisoners, receive more mail and visitors, and be restored lost time off for good behavior.

Prisoners in the Maze have been required to wear prison-issued civilian clothes during work hours.

British officials have offered greater flexibiliby in deciding what each prisoner will do, but it is unclear whether some industrial prison work would still be reqired.

The protesting prisoners also scaled down their demand for freedom of association from 100 or mor eprisoners at a time to the 25 housed in one wing of each of the H-shaped buildings inside the high-security prison.

British officials have said more generous mail and visitor privileges than those being sought by the Irish nationalist inmates are available once their protest ends, and that the restoration of some of the lost time off from their sentences could be then also be considered.

Some of the eight hunger strikers have indicated to mediators that these are acceptable terms, according to informed sources, but they have faced pressure from other prisoners and Irish nationalist paramilitary leaders outside the prison to resist compromise.

The new Irish prime minister, Garret FitzGerald, has met with the hunger strikers' relatives to try to convince them to accept "a reasonable settlement," according to one source.