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Labour Welsh government ministers and Plaid Cymru are in talks over a potential co-operation agreement in the Senedd.
A statement from the two groups on Tuesday said they are looking at where they can work together.
Labour won the Welsh Parliament election in May but did not win a majority.
It means votes from opposition parties are needed to pass votes in the Senedd, such as for budgets and laws.
The statement said there had been "constructive initial discussions" between Plaid and Labour ministers, "exploring ways of building a more equal, just and democratic nation for all".
It added: "These discussions are continuing to explore an ambitious co-operation agreement to be based around a number of defined policy priorities and the governance arrangements on which Plaid Cymru and the Labour Welsh government can work together to deliver for Wales."
BBC Wales was told that the two sides are not discussing a coalition, and Plaid are not expected to be entering government.
The results of the 2021 Senedd election left Welsh Labour with 30 seats, enough to put Mark Drakeford back in power as first minister but not enough to fully control the 60 seat chamber.
Welsh Labour formed a new government with no challenge from the opposition.
But a vote on anti-pollution zones in the Senedd before the summer break saw the Tories, Plaid and Welsh Liberal Democrat Jane Dodds force the government to a tie.
Plaid Cymru went into coalition government with Labour between 2007 and 2011.
After the 2016 election the party agreed to a "compact" co-operation deal with Labour to return Carwyn Jones as first minister - the compact ended in 2017, although Plaid supported the Welsh budget a year after that.
Welsh Conservative Senedd leader Andrew RT Davies tweeted: "A Welsh Labour Party already out of ideas and Plaid Cymru who were rejected at the ballot box. Should make for a perfect marriage."