An independent review into political party funding will recommend a cap on individual donations, the BBC has learned.
The Labour Party wants to maintain historic ties with trade unions
The option is opposed by the Labour Party as a threat to its historic links with the trade unions.
The review was set up by Tony Blair last year after the two main parties admitted raising secret loans before the 2005 general election.
Report author Sir Hayden Phillips will publish his findings on Thursday.
Sir Hayden, a former civil servant, was asked by the prime minister to examine whether agreement could be reached over changes to party funding.
'Party fury risked'
Labour wants a small increase in state funding, stringent caps on spending and voluntary caps to be placed on donations by each party, which can reflect historic links with trade unions.
But BBC political correspondent James Hardy said Sir Hayden would "risk Labour fury" by recommending a legally binding limit on individual donations, whether they are from private donors, big business or trade unions.
An earlier memorandum from Sir Hayden - seen by the BBC in December - suggested a £500,000 limit on donations from organisations, including trade unions, falling to £50,000 in four years.
Our correspondent said the Conservatives are also likely to be disappointed by Sir Hayden's recommendation that limits should be set on donations at a national level and in individual constituencies.
In recent years Tory financier Lord Ashcroft has poured money into local parties to help win marginal seats, he said.
Hope for agreement
The Tories have called for a large increase in state funding for all parties with more than two Commons seats, a cap of £50,000 on all donations, the phasing out of corporate donations - including from trade unions - and tax relief for donations.
Sources familiar with the report have told the BBC that Sir Hayden believes his findings will form the basis for an agreement between the two political parties.
The funding review was ordered following allegations, denied by all concerned, that honours have been given to people in return for people lending money to political parties.
It then emerged that ahead of the last election Labour was secretly lent nearly £14m and the Conservatives £16m. The Liberal Democrats said they borrowed £850,000 from three backers.