All Gurkha veterans will today win the right to settle in Britain following an embarrassing climb-down by Gordon Brown.
The change of heart was forced on the Government by a vigorous campaign led by the actress Joanna Lumley and a humiliating Commons defeat on the issue.
Ms Lumley will discuss the new rules with the Prime Minister in Downing Street today. Jacqui Smith, the Home Secretary, will confirm the retreat in a statement to MPs. Ministers had previously refused to allow thousands of Gurkha veterans who retired before 1997 to settle in Britain, claiming that it would cost £1.4bn to give residency rights to all 36,000 Nepalese ex-soldiers.
Under previous government proposals, only those who were officers, won medals for bravery or were injured would have been allowed to remain in the country.
Signalling the move, Mr Brown told MPs: "I believe it is possible for us to honour our commitments to the Gurkhas and to do so in a way that protects the public finances. We have a great deal of sympathy and support for those Gurkhas who wish to come into this country, many of whom have served the country and our army with huge distinction over the years."
Government lawyers were last night finalising the detail of the new policy, but Whitehall sources insisted it would satisfy the demands of campaigners.
David Enright, a lawyer for the campaign, said: "We think it is more or less a fait accompli, but we have had several false dawns before. Although everyone here is celebrating, I am not going to celebrate until I know for sure."
Campaigners have insisted that no more than 10,000 of the veterans would claim residency rights, with the majority opting to remain in Nepal. Ministers feared that allowing them to stay could give their descendants permission to stay and encourage other foreign-born veterans to apply to settle in Britain.
Ms Smith is expected to offer settlement to all veteran Gurkhas, but set tough restrictions on relatives' rights. Mr Brown suffered his first Commons defeat last month when 27 Labour MPs defied the whips to condemn the proposed immigration curbs on Gurkhas. Ms Lumley had accused the Prime Minister of failing to answer her letters. She angrily confronted Immigration minister Phil Woolas in a TV studio.