Despite the risk of a re-run of the Government's embarrassing defeat of its 1986 attempt to scrap the 1950 Shops Act, when 80 backbench Tories defied a three- line whip, Mr Clarke and most of the Cabinet are likely to favour total deregulation in proposals due for publication before Christmas.
The Shopping Hours Reform Council said yesterday that it would press Mr Clarke for the parliamentary Bill to regulate hours of work and enhance payments for Sunday working. Provided there was a 'large measure of statutory protection' there would be no difficulty in getting legislation through Parliament, Roger Boaden, the council's director, said.
But Mr Clarke fears this would open the way for others involved in Sunday or seven-day working to demand new legal protection. 'He would have to concede that to a large number of groups across a whole range of activities,' a government source said.
The council, whose campaign has attracted cross-party support, will lobby Mr Clarke to bring the law on Sunday opening into line with that in Scotland, where 23 per cent of shops use their freedom to open.
The Scottish dimension is a further reason for Mr Clarke's reluctance to bow to demands for employee protection. There are no such safeguards north of the border, a situation which would pose problems for Scottish MPs voting on the English legislation.
Ministers will bank on the support of new Tory MPs, most of whom are believed to be liberalisers. But they accept the attitude of Labour could be crucial if a Tory rebellion takes hold.
Ray Powell, Labour MP for Ogmore, has tabled a Bill, also sponsored by Conservative and Liberal Democrat MPs, to prevent chain stores opening on Sundays. But while some Labour MPs support objections by Usdaw, the shopworkers' union, to Sunday working, opposition is believed to be breaking down. Some have told whips they would not vote against the next Bill.
Mr Clarke has little option but to take action in the wake of Wednesday's opinion by the Advocate-General of the European Court of Justice that the 1950 Act does not violate the Treaty of Rome and that it is for national courts to decide whether it is appropriate to achieve its objective.
The opinion is expected to be reflected in the final judgment of the Luxembourg court in the autumn, providing a prime instance of subsidiarity - decision-making at local level wherever possible - in action. Relaxation of the law was also a manifesto commitment.
The council wants complete deregulation for small shops occupying no more than 3,000 square feet, while local authorities would decide the maximum number of hours larger stores could open.
John Marshall, MP for Hendon South, said the legislation would have to give workers the right on grounds of conscience not to work on Sundays if was to get through the House of Commons.