But he insisted he would not be entering in to any deal on Lords reform with the government.

BBC Political Correspondent Carole Walker reports on Tories warming to a Labour deal

Mr Hague comment's follows his sacking on Wednesday of the Tory Lords, Viscount Cranborne.

Lord Cranborne brokered the deal with the government behind the Tory leader's back - prompting Mr Hague to dismiss him for acting without his authority.

The Tory leader said, although he planned to accept the outcome of Lord Cranborne's talks, "I'm not doing a deal over it and I'm not having the hands of the party tied."

Lord Cranborne: Sacked by William Hague

Mr Hague's announcement comes only hours after the shadow cabinet declared its opposition to the agreement and again accusing Prime Minister Tony Blair of abandoning his principles.

Labour have said that if the Tories reject the agreement they will simply continue with the first stage of Lords reform as originally planned.

The apparent deal is the latest twist in the on-going fight between the government and the Tories over the reform of the upper chamber.

But Mr Hague's decision to sack Lord Cranborne is putting the Tory party in the Commons and Lords at loggerheads.

Many Tory peers are backing the approach of their form leader.

Earl Onslow, a senior hereditary peer said the sacking and not been wise and was "unjustified".

He added: "Mr Hague can talk about discipline, as far as I'm concerned, as long as he likes."

The new arrangement would allow the government to push through its reforms of Lords to abolish the voting rights of hereditary peers while retaining 91 of their number.

The remaining group of hereditaries would be forced out of the House of Lords only after a Royal Commission recommends the next step of reform of the upper chamber.

At present 759 hereditary peers may sit in the Lords. Tory opposition to their abolition had threatened to undermine the government's entire legislative programme.

The newly-appointed Tory leader in the Lords, Lord Strathclyde gave his backing to the proposal on Wednesday and said if it was brought forward, the Tories would grab it.

The agreement had been kept secret and was only revealed by Mr Hague during a dramatic Prime Minister's Questions clash.

Under the deal 42 Tories, 2 Labour, 3 Liberal Democrat and 28 crossbenchers hereditaries would be retained while another 16 would be allowed to remain as officials to run the Lords.

Speaking shortly afterwards, Lord Cranborne said he thought at the time he was doing the right thing, but admitted he had "behaved quite outrageously".

He said he had "exceeded his authority and gone behind his leader's back".