Proposals to remove the last hereditary peers from the House of Lords are to be shelved by Tony Blair amid fears of a damaging backlash by peers and Labour MPs.
Senior ministers are due to back down over the plans when they meet to discuss the proposed reform within the next two weeks to avoid another in the series of battles between the Government and the Lords.
The decision means the 92 remaining hereditary peers will stay in the upper house until after the next election, but paves the way for a manifesto commitment to reform the Lords.
The proposals were discussed at Cabinet yesterday, but a final decision has been deferred to a cabinet committee meeting likely to take place before the end of the month.
Downing Street and the Leader of the House, Peter Hain, yesterday stopped short of promising that the Bill would be published. Mr Hain said: "When we are ready to say how we are proceeding with the House of Lords issue we will do so."
The Prime Minister's official spokesman said an announcement would be made "shortly". He declined to say whether the Bill itself would be published.
Dropping the Lords reform Bill would represent a U-turn for Mr Blair, who announced his intention to press ahead with reform in the Queen's Speech. But it would open up the opportunity to examine longer-term reforms.
Many Labour MPs want a largely or wholly elected House of Lords, while the Tories warn that an all-appointed Lords would be a "house of cronies".
Ministers also face opposition in the House of Lords, where an alliance of Liberal Democrat and Conservative peers would easily block the legislation. The Liberal Democrats are angry at the failure to create an elected upper chamber, while Tories in the Lords are furious at a reform which would cull one in five of their peers.
The impact of such a revolt would be exacerbated by the timing of the next general election, expected to be in May next year, leaving too little time for ministers to force the Lords reform through Parliament. Ministers have already been forced to delay the Bill after cabinet ministers discovered that officials drawing up the measure had failed to make it "fireproof" to amendments from MPs who want to see the second chamber directly elected by the voters.
The Government's relations with the Lords are in disarray after ministers faced a series of defeats at the hands of peers in recent weeks. Yesterday ministers were forced to back away from plans to force reforms of the judiciary through Parliament after bowing to pressure from Tory and crossbench peers.