Curbs imposed under emergency could be lifted, partially and gradually, with the Election Commission asking the Bangladesh government to create an environment conducive to holding elections to civic bodies in April.
International pressures are also building.
Donald Camp, US principal deputy assistant secretary of state for South Asia, said after a meeting with Foreign Adviser Iftekhar A Chowdhury: "The sooner the state of emergency is lifted the better, the sooner the election can be held, the better.
"Full democracy is vital to the country. Full participation in the electoral process is vital to democracy," Camp was quoted as saying by the New Age newspaper. He added that the US would stand beside the Bangladeshi people to see power handed over to an elected government by the end of this year.
Political parties are also pressing for early polls and lifting of curbs on their activities.
Election Commissioner Brig Gen (retd) M Sakhawat Hussain said the poll panel had asked the government to create an environment conducive to the city corporation polls, The Daily Star said.
M Zillur Rahman, acting chief of the Awami League, the country's largest political party, welcomed the Election Commission's move but said it had come "seven months too late".
"It's not possible to hold the polls by 2008 if the election schedule is announced after seven months," Rahman said.
The Election Commission has also suggested that that the government, which has imposed national emergency, gradually allow "indoor politics" across the country to facilitate electoral reforms. These include registration of political parties with the commission, which is supposed to be completed in June according to the announced electoral roadmap, unnamed official sources were reported as saying.
Chief Adviser Fakhruddin Ahmed has assured the Election Commission of his government's cooperation, He said his government was also considering countrywide withdrawal of "restrictions on indoor politics", the sources added.
The parliamentary elections, however, would take place only this year-end, the chief adviser, who is performing primer ministerial functions in a caretaker government, has reiterated.
The emergency was imposed and general elections were called off amidst political turmoil in January last year.