The breakthrough came after K Atchannaidu, Minister for Labour, TDP state unit president K Kala Venkat Rao and party MLAs - Thota Trimurthulu and NVS Varma - held talks with Padmanabham at his native village Kirlampudi in East Godavari.
Kala Venkat Rao and Atchannaidu offered lime juice to Padmanabham, who has been fasting along with his wife, some family members and supporters.
The government set up the commission to study the issue of reservations for the community and it is expected to submit its report within nine months.
The government representatives asked Padmanabham to join the discussions leading up to the decision on reservation.
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The government would separately provide Rs 500 crore this year and accept all the applications made this year to Kapu Corporation by the community members for benefits, he said.
Atchannaidu said Chief Minister N Chandrababu Naidu is "very positive" on the demands of the community.
The government would be judicious in dealing with the police cases registered in connection with the violence that erupted during a rally organised by Padmanabham on January 31, the minister added.
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Meanwhile, a large number of Padmanabham's supporters gathered at his residence in Kirlampudi after word spread that police were trying to make him break his fast.
Cars were parked at the main entrance of his residence, apparently to block any such bid.
East Godavari SP Ravi Prakash today appealed to activists and local political leaders to not visit Kirlampudi as it may lead to a law and order issue.
Padmanabham has refused to undergo a medical checkup.