The District and Major League Baseball have reached a tentative agreement on a stadium lease that includes an additional $20 million payment from baseball officials and a compromise on another key provision, city government sources said yesterday.

Negotiators will continue discussions, but the deal could be wrapped up and delivered to the D.C. Council early next week, said Mark H. Tuohey, chairman of the D.C. Sports and Entertainment Commission. City sources said agreement has been reached on the District's two key demands, the $20 million payment and a letter of credit from baseball.

In return for the payment, baseball will receive a concession from the city, government sources familiar with the negotiations said. The nature of that concession was not disclosed.

"We have completed the negotiations," Tuohey said. "We are going to be doing some drafting over the weekend. We have essentially resolved the issues."

Chicago White Sox owner Jerry Reinsdorf, baseball's lead negotiator on the lease, left the District yesterday afternoon. Other baseball officials, including Washington Nationals President Tony Tavares, will meet with city officials this weekend.

"We made an awful lot of progress today and took a good, strong step forward in getting the lease done," said Vince Morris, spokesman for Mayor Anthony A. Williams (D).

Top Major League Baseball officials, speaking on condition of anonymity because the deal has not been finalized, cautioned that some negotiations remained on the lease. They declined to discuss specifics.

The stadium lease is critical because the District will not issue construction bonds and MLB Commissioner Bud Selig has said baseball will not sell the Nationals until the deal is completed.

Baseball officials have said arbitration is an option if a deal is not reached by the Dec. 31 deadline. But D.C. Council members, concerned about the rising costs of the $535 million project, have said they will reject the lease unless baseball agrees to contribute more money.

Tuohey declined to talk about details of the pending deal. But other city government sources, who spoke on condition of anonymity because the lease is not completed, said a compromise has been reached over two District demands that had become sticking points.

District negotiators have asked baseball for a $24 million letter of credit to ensure the Nationals' rent payment for four seasons in the case of a terrorist attack or players' strike and $20 million to cover contingencies in case of cost overruns. Those guarantees are needed to secure an investment-grade rating on stadium construction bonds, D.C. Chief Financial Officer Natwar M. Gandhi has said.

Baseball officials have agreed to give the city a letter of credit for one or two seasons, with the expectation that that will satisfy Wall Street, D.C. government sources said. If that money is drawn down in the future, then baseball would renew the credit line to build up the reserve fund, the sources said.

Although general terms have been reached, the deal is not finished in part because city financial officials must obtain Wall Street's blessing on whether the terms are strong enough to gain investment-grade status for the stadium project.

Maryann Young, a spokeswoman for Gandhi, declined to comment.

D.C. Council member Jack Evans (D-Ward 2), an ardent supporter of the stadium project in Southeast, said yesterday evening that he was told by a negotiator that the two sides had made significant progress.

"It's not a done deal, but what I was told is that it's safe to say there's been a lot of movement toward agreements on the two issues," said Evans, who was not directly involved in the talks.

Evans added that he expected the council to get the lease by Friday, in time to schedule a public hearing the following week. The council is scheduled to vote on the lease Dec. 20, assuming it is completed.

The emerging consensus on the lease terms follow a meeting Thursday morning among Reinsdorf, Williams and council members.

Several council members told Reinsdorf that if baseball did not agree to the city's demands, they would push to move the project to a site adjacent to Robert F. Kennedy Memorial Stadium. That location could save the city more than $100 million, some council members have said.

But that option would require a costly environmental cleanup of the site and federal and congressional approval, a process that could mean long delays before construction.

The land is owned by the National Park Service and leased to the District at no cost. The 50-year lease, which ends in 2038, allows for only one stadium on the 200-acre site. Building a new complex would require Congress to amend the 1957 law that authorized the stadium, said John Parsons, associate director for the Park Service's National Capital Region.

The project also would require an environmental impact statement and approval from the Park Service, the National Capital Planning Commission and the U.S. Commission of Fine Arts, Parsons said.

He said the whole process could take two to three years. "That's quite a bit different than their existing circumstance because the other proposal is not on federal land," he said.

An environmental impact study completed in 1993 found potentially harmful lead contamination in the soil.

Staff writer Ray Rivera contributed to this report.