The Latin American and Caribbean Group (GRULAC) of the United Nations was set to meet Thursday to endorse Panama as a compromise candidate after 47 votes in the General Assembly failed to produce a winner for the seat.

Ecuador's UN ambassador Diego Cordovez announced late Wednesday that Guatemala and Venezuela had agreed to give up the chase after a heated contest driven by regional geopolitics and the deep enmity between Washington and Caracas.

Cordovez made the announcement after he mediated talks at Ecuador's United Nations mission between Guatemalan Foreign Minister Gert Rosenthal and his Venezuelan counterpart Nicolas Maduro.

"The two foreign ministers have agreed on two issues," said Cordovez, who mediated between Venezuela and Guatemala.

"Both will withdraw their candidacy to the Security Council, and second, Panama will be the country that the three of us will present to the (GRULAC) group" to represent the region, he added, with Rosenthal and Maduro at his side.

All three men said that Panama had accepted the offer.

Panama is a country "very close to Venezuela for historical reasons, and is welcome at both ends of our continent," Rosenthal said.

"We are leaving as friends with Venezuela," he added, shaking hands with Maduro.

Guatemala, which Venezuela sought to portray as a US puppet, won all but one round of voting in the 192-member General Assembly over the past three weeks for the non-permanent council seat being vacated by Argentina on December 31.

But it failed each time to obtain the required two-thirds majority needed to win the rotating council positions, one of ten.

US Ambassador John Bolton campaigned heavily for Guatemala, fearing that Venezuela under leftist President Hugo Chavez would use a council seat to oppose US measures and openly attack the United States.

Chavez, who used an address to the UN General Assembly last September to call US President George W. Bush the "devil", had characterised his ability to stymie Guatemala's candidacy as a victory over US imperialism.

Many diplomats felt Chavez hurt his cause with his undiplomatic comments, but Rosenthal also acknowledged that Washington's support for Guatemala was "a double-edge sword." He added: "Guatemala has waited 61 years to be a member of the Security Council and can wait five more."

Guatemala is one of the few UN founding members that has never joined the Security Council.

Venezuela's Maduro said that "the most important thing is that Latin America and the Caribbean are able to have a sovereign dialogue to reach a dignified consensus."

A spokeswoman for the General Assembly said before the compromise was announced that the General Assembly would vote on the issue Tuesday. But diplomats later said the vote could be brought forward in view recent developments.

The Security Council is made up of 15 members, including five veto-wielding permanent members -- China, the United States, France, Britain and Russia -- and 10 non-permanent members.