The European Commission and motor sport officials are poised to end a four-year dispute over whether broadcasting rights arrangements for Formula One racing and other top motor sports breach EU competition rules.

The dispute has been a big factor in frustrating plans by Bernie Ecclestone, the motor sport promoter, to mount a $2.5 billion-plus flotation of Formula One.

The Federation Internationale de l'Automobile is expected to tell Mario Monti, European competition commissioner, early next week that it is ready to withdraw from its existing commercial involvement in the top levels of the sport, notably Formula One and the World Rally Championship.

In future, it will confine itself to its regulatory role of drafting motor sport rules, licensing, safety and related issues, Monti is expected to be told.

People close to informal contacts between the two sides said the proposals were subject to the FIA receiving a one-off payment from Ecclestone.

The FIA granted Ecclestone exclusive broadcasting rights to Formula One, the World Rally Championship and Formula 2000 until 2010.

EU officials have argued that these agreements are too long-term and restrictive, and exclude other potential promoters from the sport.

The FIA president, Max Mosley, refused to comment on the issue last night. However, a hearing due to start next Wednesday into the commission's objections has been cancelled in the expectation that a compromise can be reached in informal discussions early next week.

Monti wrote to Mosley on Tuesday to say that at first sight the new proposals offered some new elements.

Negotiations between Monti's predecessor, Karel van Miert, and the Formula One bodies had degenerated to the level of personal accusations.

Van Miert had accused Formula One of being the worst abuse of a dominant position he had seen and Mosley claimed he had a personal vendetta against the sport.