Shabana Mahmood's immigration crackdown is set to be watered down amid fears of a huge Labour rebellion.
The Home Secretary aims to extend the permanent residency waiting period from five to ten years.
For some lower-paid migrants, the wait for indefinite leave to remain (ILR) could stretch to 15 years.
Proposals to apply the changes retroactively are likely to be softened after Housing Secretary Angela Rayner labelled the plan "un-British".
According to The Sun, government whips are racing to avert a revolt by consulting Labour MPs.
Opposition is believed to extend beyond the 100 signatories of a protest letter, with additional MPs either unwilling or unable to attach their names.
A government source said, "The PM is tougher on migration than many people think but on ILR there's a clear direction of travel. It will now be more surprising if we stick with the proposals."
Forecasts estimate about 1.6 million migrants from the "Boriswave" will qualify for residency between now and 2030, including hundreds of thousands of low-paid workers and their families.
Permanent residency unlocks eligibility for benefits.
Ms. Mahmood has acknowledged that the measure could cost taxpayers £10 billion for low-wage care workers alone.
Shadow Home Secretary Chris Philp accused her of preparing to "surrender to the open-borders Left, led by Angela Rayner".
Negotiations are continuing up to the last minute.
A government source added, "It's a stand-off between the Treasury and the Home Office."
PM's 9k boat toll
By Julia Atherley
More than 9,000 small-boat migrants have illegally crossed the Channel since Andy Burnham became PM.
Data show 9,229 arrivals since July 20, with 500 reported to have arrived last Friday.
A video captured a knife-wielding man shouting, "I will kill you" while trying to board a dinghy bound for the UK from Hardelot, near Boulogne in France.
To date this year, 21,198 migrants have crossed, a 43 percent drop compared with the same period last year.
