Getty ImagesThe government is no longer ruling out a youth visa deal with the EU, ahead of a summit next month to "reset" relations after Brexit.
Labour has previously said it has "no plans" for such a scheme, which would make it easier for young people to study and work abroad.
But an agreement has emerged as a key European demand in ongoing negotiations between the two sides to boost co-operation. Downing Street declined to repeat its previous opposition to reporters on Thursday, saying it would not provide a "running commentary" on talks.
It comes as over 60 Labour MPs called on ministers to strike a "new and bespoke youth visa scheme for UK and EU citizens aged under 30".
In a letter to EU relations minister Nick Thomas-Symonds, they argued a mutual deal for time-limited visas, subject to a cap, would "extend new cultural, educational, and economic opportunities to young people in the UK".
Sir Keir Starmer is expected to meet European Commission President Ursula von der Leyen later, as preparations increase for the summit in London on 19 May.
The Labour government is aiming to forge closer economic ties to the EU after Brexit. Both sides have also expressed a renewed interest in a defence and security pact amid the war in Ukraine.
A defence deal would potentially unlock full UK access to a €150bn (£128bn) EU-backed loans scheme, with British firms otherwise limited to providing up to 35% of the value of projects funded under the programme.
Speaking at UK Trade and Business Commission meeting on Thursday, Germany's ambassador to the UK Miguel Berger said he wanted to see progress on a youth visa deal as part of a "package approach" to the talks, where different topics are linked together.
He added that EU citizens had faced "many obstacles" to moving to the UK since Brexit, including "very high thresholds" for skilled work visas.
The UK currently offers visas allowing young people from 12 non-EU countries including Japan, South Korea and Uruguay to study or work in the UK for up to two years. Those from Australia, Canada or New Zealand can extend by a further year.
These visas are subject to annual quotas, ranging from 100 visas for Andorra to 42,000 for Australia, with ballots held where they are oversubscribed.
Applicants from these countries need at least £2,530 in savings, cannot apply for most benefits, and have to pay an annual NHS surcharge of £776 for students and £1,035 for workers.
The European Commission first suggested an EU-wide youth deal in April last year, claiming Rishi Sunak's government had approached European capitals to discuss individual visa deals, risking "differential treatment" of EU citizens.
Under its original proposal, people aged between 18 and 30 would be able to apply for visas lasting up to four years to work, study, train or volunteer, with no overall cap on the number of visas issued.
It also said EU applicants should not have to pay the NHS surcharge, and should be able to pay pay the same university tuition fees as British students, rather than the higher fees they have had to pay since Brexit.
There have been suggestions that the Home Office, tasked with delivering government plans to lower overall migration, is pushing for any eventual agreement to be more limited than that suggested by the European Commission.
Home Secretary Yvette Cooper is reportedly arguing for visas to be limited to one year so that EU citizens taking part do not show up in official immigration figures, with applications also subject to an overall cap.
Asked about the reports, Mr Berger declined to comment, saying that "we have to leave that to the negotiations".
The EU has been keen to stress that a visa deal would not replicate the bloc's rules on freedom of movement, under which EU citizens were automatically entitled to live and work in the UK without applying for a visa.
Documents circulated between EU states also suggest a deal could be rebranded as a "youth experience" scheme, in an apparent bid to downplay any link to migration.
But any deal that is negotiated is likely to lead to a political row, with the Conservatives and Reform UK critical of a proposed agreement.
During a local election campaign visit earlier, Tory leader Kemi Badenoch said a deal risked "another avenue which people might use to game the system," adding that Labour "doesn't know how to negotiate".
She added: "Where are all these people they want to bring in going to work?"
Reform leader Nigel Farage said a deal could lead to a "huge number of people" coming to the UK, adding it would be "completely against what the Brexit vote demanded".
An agreement has however been strongly supported by the Liberal Democrats and the Greens, which have long been calling on the Labour government to reach an agreement with the EU.
In his comments on Thursday, Mr Berger insisted a deal would have "nothing to do with migration" as those taking part in the scheme would "go home" once their visa has ended.
