DUBLIN- Britain is set to announce further extensions to post-Brexit grace periods on some goods imports to Northern Ireland, Irish deputy prime minister Leo Varadkar said on Monday, suggesting London and Brussels had agreed they needed more time for talks.

Ireland is a key player in post-Brexit trade talks and Varadkar, speaking after a meeting with British Cabinet Office Minister Michael Gove, said he expected the British move to lead towards attempts to reach a more permanent solution.

The fate of British-ruled Northern Ireland was the most contentious issue in Britain's negotiations over its exit from the EU, and has continued to cause friction since Britain left.

To avoid imposing a hard border on the island of Ireland, Britain agreed to leave some EU rules in place in Northern Ireland and accept checks on goods arriving there from elsewhere in the United Kingdom. But London has since said the arrangement is not working and wants it changed, while the EU rejects renegotiating the treaty.

Officials in London and Brussels are trying to prevent the dispute from escalating into a full-blown trade war.

The European Commission agreed in July to freeze legal action against Britain for making changes to the protocol that Brussels says breach the Brexit treaty.

London has now indicated it would extend grace periods, suspending new checks on cross-channel trade due to kick in within weeks.

"The expectation is that the United Kingdom will announce a further extension of the grace periods, not just in relation to Northern Ireland but also imports from the EU and Ireland into the UK," Varadkar said in an interview with Irish state broadcaster RTE.

"It is important that we use the period of any extension that may occur really to get down to business and to try to put in place more permanent ... arrangements to make sure that the protocol is made more workable," Varadkar told RTE.

The European Commission is expected to "note" the British decision rather than retaliate, RTE reported.

But Varadkar warned that any more permanent solution secured between London and Brussels would have to be within the confines of the existing agreement.

Varadkar said Gove had told him that Britain "doesn't want to walk away from the protocol but does want to make it more workable."

Irish Prime Minister Micheal Martin last month said he believed the issues could be resolved with the right political will. 

(Reporting by Conor Humphries; Editing by Michael Holden) ((conor.humphries@thomsonreuters.com; +353 1 236 1915;))