David Cameron is set to propose a major watering-down of the coalition's Lords reform proposals, according to reports.
The prime minister told backbench MPs last night that he would attempt "one more try" to secure agreement on the constitutional change, before abandoning attempts at Lords reform altogether.
Under the Tory proposal to be put to Nick Clegg, the 92 hereditary peers would be replaced with elected peers. The current terms of the Lords reform bill, which sees a transition to an 80% elected House, would be abandoned in this parliament altogether.
"There is not going to be endless haggling with the Lib Dems," Cameron told his MPs in the first meeting of the 1922 committee since the Tory leader's worst rebellion.
"We are going to have one more try to see if we can secure a way forward and achieve a smaller elected element," he said.
"If we fail to do that then we need to draw a line.
"We are not going to go on and on with this and damage the rest of the government's programme."
Ministers withdrew the programme motion which would have ensured the bill's passage through the Commons after it became clear a massive Tory rebellion was inevitable.
Leader of the House Sir George Young told MPs on Tuesday night that he would only be able to update the Commons about the state of play on Thursday lunchtime.
But in business questions today he was only able to repeat the government's intention to table a programme motion in the autumn.
"What we want to do is reflect [and]allow time for meaningful discussion… to build a consensus on the best way forward," Young said.
Monday night saw 91 Tory MPs rebel against the bill's second reading, meaning the government would have lost the vote had it not been for support from Labour.
Cameron made clear in last night's meeting that he would not consider a deal with the opposition because Labour "cannot be trusted".
That prompted complaints from shadow constitutional reform minister Wayne David, who asked Young: "How on earth can we have constructive dialogue if there no mutual respect?"
Young replied: "We are very anxious to have constructive dialogue, but despite repeated requests on the floor of the House for how many days they want in committee we didn't get an answer."
Lords reform is unlikely to succeed without cross-party consensus, but Cameron's willingness to demand a major dilution of the proposals could make the opposition's role irrelevant.
Liberal Democrats are likely to view the refusal to press on with the proposals in their current form as a breach of faith.
The coalition's junior party has been undermined by Nick Clegg's suggestion that a referendum could be considered after the first tranche of elections takes place in 2015.
Such a move would increase the chances of the public accepting the government's proposals as they currently stand. Lib Dems claim such a move would undermine the terms of the coalition agreement.
Clegg reportedly chose to prioritise Lords reform over scrapping the unpopular NHS reforms when he met with Cameron after May 2011's electoral reform referendum defeat, the Times reported.