Downing Street has insisted the "minimum number" of prisoners will be given the vote amid signs of a Government U-turn on the controversial issue.
Speculation has been growing that ministers are preparing to back down over plans to give the vote to all inmates serving less than four years after a backbench revolt in the House of Commons. The cut-off point could be reduced to sentences of 12 months or less.
David Cameron has said the idea of giving prisoners the vote makes him "physically ill", but the European Court of Human Rights found that the 140-year-old blanket ban was unlawful.
Failure to comply could cost tens of millions of pounds in legal costs and compensation, ministers warned. Some 2,500 inmates already have cases in motion.
But the prospect of granting the vote to more than 28,000 prisoners - including 6,000 violent offenders, 1,700 convicted of sex crimes and more than 4,000 burglars - sparked fury on Conservative backbenches when the four-year cut-off was floated last month.
Angry MPs will have a chance to revolt against the proposal in a few weeks' time, after Labour's former justice secretary Jack Straw and senior Tory David Davis secured a Commons vote on the issue.
Cutting the maximum sentence under which prisoners can retain the right to vote to one year may see off a potentially embarrassing rebellion.
But it is almost certain to be tested in the courts, with the Government far from certain of victory.
The Prime Minister's spokesman declined to say whether a one-year maximum sentence was under consideration.
He told reporters: "Our intention is to ensure that the minimum number of prisoners get the vote.
"At the same time, because this is an issue that has been sitting there for a number of years and hasn't been resolved, we have a backlog of compensation claims by prisoners. Clearly we can't ignore that and the possible costs associated with it.
"What the number should be - whether it is four years or some other figure - is essentially a matter of legal advice."
The spokesman declined to reveal whether the Prime Minister had sought fresh legal advice since the proposal for a four-year cut-off point was first announced.
"Clearly, the statements that have been made by the Government have reflected the legal advice that we have had," he said.
A Cabinet Office spokesman said: "Removing the blanket ban on prisoners voting is not a choice but a legal obligation as a result of a court ruling.
"Failure to implement the ruling would not only put the Government in breach of its international obligations but risk paying out taxpayers' money in compensation claims.
"The Government will do the absolute minimum to meet its obligations and will ensure that the most serious offenders are barred from voting."
Shadow justice secretary Sadiq Khan said: "I am pleased that this Government has undertaken this U-turn.
"The Government should be standing up for the victims of crime but instead they are slashing police numbers and giving dangerous convicted prisoners the vote.
"I hope for all our sakes this is the first of many U-turns."