UPDATE 1-Major progress reported in Hollywood writers talks

(Adds source confirming "significant progress" made in talks)

By Steve Gorman

LOS ANGELES, Feb 2 (Reuters) - Hollywood's striking writers and major studios made "significant progress" in recent talks aimed at ending their labor dispute, a source briefed on the discussions said on Saturday, raising hopes a settlement may be near.

Word of a breakthrough came as the Writers Guild of America strike neared its three-month mark and after 11 days of low-key contract talks that followed a separate labor deal between the studios and Hollywood directors.

The current writers' talks were initially conceived as "informal discussions" designed to sketch the outlines of a potential settlement and to lay a foundation for the resumption of full-scale bargaining that collapsed in acrimony on Dec. 7.

But the latest sessions proved more fruitful than expected, evolving into substantive negotiations now expected to lead straight to a deal that would put the 10,500 striking writers back to work, the source said.

The person who was briefed on the talks but spoke on condition of anonymity because the individual was not authorized to talk on the record, told Reuters, "I know they made significant progress" on Friday. The source declined to give further details.

Any deal would have to be endorsed by the governing boards of the WGA's East and West Coast branches and ratified by the union's rank and file.

The chief sticking point in the labor dispute has been the question of how much writers should be compensated for work distributed over the Internet and other digital media.