The Scottish National Party will be offered the chance of a binding referendum on independence, but only if it is held within 18 months, it was reported.
In what will be seen as a major gamble over the future of the UK, prime minister David Cameron was said to be ready to present first minister Alex Salmond with the ultimatum.
The prime minister said yesterday that he would publish legal advice in the coming days that would offer a “fair, legal and decisive” solution.
It is expected to confirm that without the backing of Westminster, any referendum result would only have advisory status - albeit almost impossible to ignore.
Mr Cameron would offer to allow a binding poll but only if it was held within a set timetable.
Restrictions could also include a bar to including a third alternative instead of a straight Yes or No choice: remaining in the UK but with massively increased devolved powers.
The SNP has pledged to conduct a referendum in the latter half of its term, which ends in 2016, with 2014 thought to be the preferred date.
But renewing his strong opposition to a Scottish breakaway, he said “uncertainty” over the timing of a vote was damaging the economy north of the border and in the rest of the UK.
Mr Cameron accused the governing party at Holyrood of holding off in the hope of building support for independence which it knew “at heart” Scottish voters did not want.
“He (Mr Salmond) is trying to create a situation where that bubbles up and happens whereas I think we need some decisiveness so we can clear up this issue,” he told the BBC.
Mr Cameron told BBC's Andrew Marr Show that the United Kingdom was "one of the most successful partnerships in the history of the world" and should be fought for hard.
“It would be desperately sad if Scotland chose to leave the United Kingdom and I will do everything I can to encourage Scotland to stay in the United Kingdom because I think that is the best for all our economies, Scotland included, and all our societies.”
“Let’s not drift apart. I think he (Alex Salmond) knows the Scottish people at heart do not want a full separation and so I don’t think we should just let this go on year after year. I think that’s damaging for everyone concerned, so let’s clear up the legal situation and then have a debate about how we bring this to a conclusion. My view is that sooner rather than later would be better.”
Recent polls have suggested a gradual increase in support though still short of a majority.
Critics will fear however that Mr Cameron’s plan could backfire by stirring up nationalist sentiment in reaction to perceived Westminster interference.
Responding to Mr Cameron’s remarks yesterday, a spokesman for Mr Salmond said his administration had an “overwhelming mandate” from voters for a referendum in the second half of this parliamentary term - a promise the SNP made in elections that swept it to power last May.
“And that is exactly what we will do. “Westminster politicians should just let the people and parliament of Scotland deliver the referendum in the timescale set out in the election.
“The only anxiety in these matters seems to be among Westminster-based politicians, who have gone from a position of wanting no referendum to demanding one immediately - with no intervening period whatsoever, and no mandate to do so.”
PA