Parents in England and Wales who smack their children could lose the defence of "reasonable chastisement" if they are found to have hurt them.
Parents could be prosecuted if they cause 'actual bodily harm'
Campaigners want a complete ban on the practice but ministers feel that would intrude too much on family life.
Instead there is to be a free vote in the House of Lords on Monday on an amendment allowing moderate smacking.
Parents could be restricted to giving their children mild smacks which do not amount to causing actual bodily harm.
Under the amendment, tabled by Liberal Democrat Lord Lester of Herne Hill, any parent smacking a child and causing harm, such as bruising, scratching or reddening of the skin, could be prosecuted.
The government favours this amendment over a rival one from a cross-party group of peers that would effectively ban smacking.
Under Lord Lester's amendment, parents would still be able to smack their children if they don't harm them physically or mentally.
They would no longer have the protection of
"reasonable chastisement", which was introduced in 1860.
Caning in the home would also be forbidden, as would causing psychological distress to a child.
Lord Lester told the BBC: "I think that smacking is undesirable, just as I think verbal violence is undesirable. I plead guilty as a parent who has occasionally smacked my children.
"I think I probably was wrong to do so but I don't think that everything I disapprove of should be a criminal offence."
Health Secretary Dr John Reid was asked about the issue on BBC1's Breakfast with Frost programme.
He said: "I think people want this middle road between not constraining parents too much from bringing their own children up, but on the other hand making sure that the law can't be used for some of the terrible violence we have seen against kids recently.
"That's why this compromise solution, I think, most people would think is sensible."
Peers will vote on the amendment during the bill's report stage on Monday afternoon.
A Department for Education and Skills spokesman said the government would not be allowing a free vote on the rival banning amendment, which he said would be "an unwarranted intrusion into family life".
'Right to protection'
Peers campaigning for a ban say that existing law offers children less protection from assault than adults.
Crossbencher Baroness Finlay of Llandaff said: "Other amendments falling short of equal protection would
lead to greater legal ambiguity, professional uncertainty and parental confusion.
"They are about defining ways that children can continue to be hit, which we would not tolerate for any other human being."
Agony aunt Claire Rayner, spokesman for the Children Are Unbeatable alliance of more than 350 organisations campaigning for a ban, said: "We urge peers to take a principled stand and take an historic step towards
realising children's right to the same protection from assault that adults take for granted."