A commission will be set up within days to consider whether the Government should bring in a "British Bill of Rights" following mounting controversy over rulings by the European Court of Human Rights.
The move will delight Conservative MPs, many of whom want Britain to curb the power of the European Convention of Human Rights (ECHR) after it ordered the Government to grant prisoners the vote at general elections.
The Liberal Democrats will back the creation of the commission but do not want to dilute the Human Rights Act, which incorporated the ECHR into British law. The commission will try to find a compromise acceptable to the Coalition partners but ministers in both parties admit the divide between them may be too wide to be bridged.
The commission will have an independent chairman and will include a wide range of experts on human rights laws and the constitution. It will be announced jointly by Kenneth Clarke, the Justice Secretary, and Nick Clegg, the Deputy Prime Minister.
It is expected to look at how a UK Bill of Rights might affect Britain's obligations under the ECHR, which allows the Supreme Court, the highest domestic court, to be overruled by judges in Strasbourg. Options include reforming the European Court of Human Rights, possibly by opting out in an attempt to force changes that would then allow Britain to opt back in. The Liberal Democrats are unlikely to support such a dramatic move, believing it would undermine the country's commitment to human rights.
"It is a red-line area for the Lib Dems," one Tory minister admitted yesterday. "There is no guarantee the commission will find a way forward and the two parties may have to agree to disagree." A Liberal Democrat minister agreed: "We may end up going our own ways."
Such an outcome would result in the Tories drawing up a policy for inclusion in their manifesto at the next general election. Mr Clarke has insisted the Government must obey judgments by the European Court of Human Rights, but David Cameron is determined to see the Convention reformed.
Last month, the Commons agreed overwhelmingly to keep the ban on prisoners voting. The Government is now considering whether to bring in legislation to implement a 2005 ruling from Strasbourg saying the ban should be lifted. One proposal is to restrict the right to vote to people serving sentences of up to six months so that serious offenders were not enfranchised. But ministers cannot be sure that the Commons would approve such a move.
At last year's general election, the Tories pledged to replace the Human Rights Act, introduced by Labour in 1998, with a UK Bill of Rights, while the Liberal Democrats promised to protect the Act.
Ministers admit privately the Coalition Agreement's wording on the Convention was designed to paper over the two parties' different policies.Reuse content