Under the climbdown, to be revealed today during the Lords committee stage of the Police and Magistrates Courts Bill, Earl Ferrers, the Home Office minister, will concede that the proposed new 'independent' or co-opted members of police authorities should be chosen by local communities, not the Home Office.
The Government will also bow to Opposition demands for local council representatives to form the majority on the authorities. The two concessions will rank as the fifth substantial U-turn on the sections of the Bill dealing with the police.
Under a deal between Earl Ferrers and Lord McIntosh of Haringey, Labour's Lords home affairs spokesman, shortlists of candidates for the co-opted positions will be drawn up by a three-strong panel, one for each police area.
The panels will include one Home Office appointee and one member chosen by the local authority and magistrates. The two will then choose the third member.
The system will be at 'arm's length' from the Home Office, with the panels submitting a list of names to the Home Secretary, who will then send back a shortened list of those he views as best qualified. The authority will choose the co- opted members from this list.
Mr Howard had already indicated privately his willingness to drop the much-criticised idea of Lord Lieutenants of counties drawing up shortlists and his wish to see people without party political affiliations serving on authorities.
Local government control of police authorities would have been ended by the original provision for eight council representatives, three magistrates and five members appointed by the Home Secretary.
Mr Howard had already abandoned plans to appoint authority chairmen and limit members to 16. But a fortnight ago an alliance of opposition parties and Tory rebels, including former home secretaries, forced the Government to contemplate fresh concessions.
The Bill's battering comes against the background of one of the most intensive lobbying exercises the Lords has experienced.
The Government believes that the current system has produced often supine police authorities content to maintain the status quo. But the Police Federation, representing rank-and-file officers, and the Association of Chief Police Officers (Acpo) have consistently argued the measure is aimed at politicising the police and imposing, through the Home Office appointees, a measure of Government interference.
Virtually every peer has received a copy of the federation's detailed critique of the Bill. Home Office officials have, meanwhile, been unnerved by the discovery that Acpo and the Labour-controlled Association of Metropolitan Authorities have been lobbying in tandem.