LEEDS CASTLE, England (AFP) - All-party talks to revive Northern Ireland's peace process began after two years of stalemate, as Sinn Fein leader Gerry Adams predicted a deal despite an alleged spying incident.

At the crux of the three-day summit to be led by Prime Minister Tony Blair and Irish Prime Minister Bertie Ahern is the quest, shared by the rival Protestant and Catholic parties alike, to restore the power-sharing government set up by the Good Friday agreement of 1998.

Adams carried a bugging device -- a 1.5-meter (5 feet, 3 inch) long wooden box stuffed with microphones and batteries -- into the talks which he said earlier this week had been found at Sinn Fein offices.

The alleged spying by the British government was "the height of hypocrisy" and "the exact opposite way of building the peace process," he said.

Adams told journalists his party was nevertheless here for business. "A deal between Sinn Fein and the Democratic Unionist Party (DUP) is inevitable."

Blair and Ahern have stressed that a deal this week is possible before the talks, which are taking place at Leeds Castle in southeast England, wrap up on Saturday.

But acrimony has overshadowed the talks since Sinn Fein, the political wing of the Catholic paramilitary Irish Republican Army (IRA), alleged earlier this week that it had found the bugging device at its west Belfast offices.

A power-sharing government and the Northern Ireland Assembly were suspended in October 2002 amid allegations that the IRA was involved in spying. Britain then resumed direct rule over the province.

The hardline Protestant DUP, headed by the aging sectarian firebrand Ian Paisley, has long refused to sit down at the table with Sinn Fein.

But now they both are Northern Ireland's largest elected parties, and keen to exercise their newfound power in a restored government -- even if this means negotiation with arch-rivals.

Key demands to be put to Sinn Fein this week include a fresh call for the IRA to disarm under the watch of an international commission and in a way that can be believed by skeptical Unionists.

The IRA has been observing "a complete cessation of military activities" since August 1994, and given up some of its arsenal, but has resisted calls to declare its armed struggle over.

Britain's minister for Northern Ireland Paul Murphy and Irish Foreign Minister Brian Cowen kicked off with meetings in the morning with each party, which were to be followed by talks with the prime ministers later in the day.

Sinn Fein is calling for the full implementation of the Good Friday deal, and wants the Northern Ireland government also to take control over sensitive issues like security and policing.

Negotiators are expected to try to hammer out a timetable for the handover of those responsibilities to the Northern Ireland government and the removal of Britain's remaining fortified military outposts.

Despite the political deadlock, the Good Friday deal has nevertheless ended most of the daily sectarian violence that killed nearly 3,300 people and injured more than 36,000 over three decades.

In addition to Blair and Ahern, the United States envoy on Northern Ireland Mitchell Reiss is due to attend the talks.