The two were scheduled to go to court on Monday over the refusal by the Swiss bank to give the US Internal Revenue Services the names of its offshore customers.
However, the chances of a deal being reached without legal action have now increased after a delay of three weeks was sought by the Department of Justice (DoJ), UBS and the Swiss government.
Despite the delay, the DoJ said any deal would have to involve UBS providing information on a "significant number" of the 52,000 US taxpayers that have offshore accounts.
"If the court does enter an order enforcing the summons - as we believe it should - then UBS will have to decide whether or not to comply with the order. UBS, like any other litigant, would refuse to comply at its peril," the DoJ was quoted by the Financial Times as stating.
UBS provides wealth management services in markets around the globe and has over 8,000 financial advisors based in the US.