Jack Straw has drawn up plans for a smaller, half-elected House of Lords containing no hereditary peers, it has emerged.
Proposals put forward by the leader of the Commons and leaked to the Sunday Times could be the subject of a free vote in both houses before Christmas.
The first elections to the reformed Lords could then take place at the next general election.
The 18-page memo, presented by Straw to the cross-party working group on Lords reform on October 12, is expected to form the basis of a white paper to be published next month.
The plans would see the number of Lords reduced from 741 to about 450, with half elected and half nominated.
The process of elections is apparently still being discussed, but the paper reports that it is likely to be a list system similar to that used in the Scottish parliament.
Under the proposals no single party would be allowed an overall majority, regardless of its strength in the Commons.
A nine-strong commission, one-third of which would be chosen by party leaders, would make appointments to the chamber.
The panel would be required to substantially increase the number of women and ethnic minority peers.
The lords spiritual would remain, but with the number of bishops cut from 26 to 16.
Peers would be allowed to sit in the Lords for no more than three parliamentary terms.
The system of lords claiming allowances for attending would also be changed, with peers instead paid a salary and expected to work full-time.
Agreement has apparently not been reached over the future of the political appointments system.
Negotiations are said to be continuing over the name of the chamber and peers - the Liberal Democrats reportedly want lords and ladies to be called MLs, members of the Lords.
The Sunday Times quotes a Lib Dem peer close to the negotiations as saying: "The Lords reform log-jam is breaking up.
"You can really feel the earth move when even Jack Straw, a hardcore constitutional conservative, is backing a 50 per cent elected House of Lords.
"This must be the best chance of reform for a century."
A government spokesman made clear the leaked document was a work in progress.
"This document is Jack Straw's attempt to facilitate cross-party discussion and that discussion is continuing. It is not government policy," he said.
It is understood that Straw may revise the proposals in the light of the committee's response, as well as discussions with cabinet colleagues and the government's response to the upcoming Cunningham committee report on the conventions governing relations between the two houses.
23 October 2006