Controversial plans to reform the system of control orders for suspected terrorists will be outlined by Home Secretary Theresa May this week.
The orders, which have been described as being akin to house arrest by critics, are likely to be replaced with "surveillance orders"
The system of curfews will be eased, along with restrictions on the use of mobile phones and computers, but some controls are likely to be kept for a small number of individuals.
The issue is particularly fraught for the Liberal Democrats and Deputy Prime Minister Nick Clegg, who campaigned at the general election on a pledge to abolish control orders completely.
It is understood the revised form of control orders could include concessions over pastoral care, education and work.
Lord Carlile, the independent reviewer of counter-terrorism powers, said everyone now understands that there is a small cohort of suspected terrorists who could not be prosecuted and "against whom some protection is required".
"If we do not have curfews, and if we do not have limitations on meetings and the use of the internet, then we might as well not have them at all," he told MPs last month.
"If we don't have them at all, then in my judgment there will be terrorists walking the streets who present a great danger to the public."
A total of eight terror suspects are currently subject to control orders, but putting them under surveillance instead would be difficult with limited resources. Round-the-clock surveillance of just one suspect can involve up to 60 officers, it is understood.
Civil rights group Liberty has said the "confused and conflicting" briefings coming out of government made it impossible to assess what was being proposed. Shami Chakrabarti, the charity's director, said: "The crucial question remains whether suspects are to be brought within the criminal justice system or branded criminals by executive order and left under permanent suspicion and restriction in the community."