The Congress Core Group chaired by party president Sonia Gandhi with Prime Minister Manmohan Singh by her side deliberated the issue in an hour-long meeting.
Highly placed sources in the party later said the matter has been settled and that it was more do with coordination in the government than any fight for number-2 position in the Union Cabinet.
At the AICC headquarters, party general secretary Janardan Dwivedi said Congress views Pawar as a "senior and respectable" leader, who is "looked upon with reverence" in UPA.
Another party general secretary Digvijay Singh sought to debunk the number-2 in Cabinet theory maintaining "in a Parliamentary democracy, all are equal in Cabinet. The Prime Minister is first among equals and there is no number two or number three".
When asked to comment on NCP saying it was unhappy about certain aspects, Dwivedi said in a coalition government, allies can look at issues differently.
"In alliance government, different allies can look at an issue differently. If any such things happen in government a solution emerges through talks," he said.
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On whether the NCP chief was mulling the option of pulling out of the government, Dwivedi said, "There is no such serious problem. A solution will be found."
A senior party leader speaking on the condition of anonymity said that Congress never intended to humiliate or hurt the key ally leader.
Sources said Pawar wrote a letter to Congress President Sonia Gandhi and Prime Minister Manmohan expressing willingness to get out of Government while making it clear that NCP will continue to remain a UPA ally. Both Gandhi and Singh, however, urged him to remain in government.