Alistair Darling is set to make a Commons statement at 1530 BST on his plans to compensate those who lost out when the 10p tax band was scrapped.
Chancellor Alistair Darling is explaining to MPs how he plans to compensate those people effected by the scrapping of the 10p tax band.
The issue has sparked anger among Labour MPs, and ministers will want to publish many of the details before the Crewe & Nantwich by-election next week.
He will be hoping the scheme will be enough to see off a potential rebellion by Labour MPs, angry that the move will hit 5.3m of the lowest paid workers.
Ex-minister Frank Field said abolition of the 10p rate could be the trigger that brings Gordon Brown down.
Sources say the proposals will be "costly", but are "significant" and will "fix the political problem".
The chancellor briefed the Cabinet about the plans in No 10 on Tuesday.
The full details of the package will be in the pre-Budget report in the autumn.
He told ministers he planned to set out the "latest thinking" about compensation for those hit by the abolition of the 10p rate.
Labour whips have been encouraging their MPs to listen to the plans, believing it will be enough to prevent a revolt.
Memoirs
'Under pressure'
However, he said full details would not be available until the pre-Budget report in November.
The scrapping of the 10p tax rate sparked anger among Labour backbenchers, with many fearful of its impact on next week's Crewe & Nantwich by-election.
Mr Darling has insisted he will "do more" in next year's Budget to help those who have lost out from the scrapping of the 10p rate.
Mr Darling has already insisted he would "do more" in next year's Budget to help those who have lost out, but he has been under increasing pressure to act now.
But he is under pressure to act now, with Mr Field and a number of Labour MPs threatening to vote down this year's Budget.
Ex-welfare minister Frank Field and a number of Labour MPs have threatened to vote down this year's Budget and the tax change was blamed for a terrible set of local election results.
The prime minister has also had to deal with poor local election results, the publication of explosive memoirs by Cherie Blair, John Prescott and Lord Levy and next week's crunch by-election.
The scrapping of the lowest rate of income tax was announced last year but came into effect last month, alongside a reduction in the basic rate of income tax from 22p to 20p and increases in child benefit and tax credits.
It's right that we continue to do everything we can to help people, especially people at the lower end of the income scales Alistair DarlingChancellor of the Exchequer
'Bizarre'
On Wednesday, the government will outline its "draft Queen's Speech" - the bills it intends to introduce in the next parliamentary session - and the 10p issue is also expected to be featured.
But it emerged that pensioners aged 60 to 64 and low earners without children were losing out as they had to pay 20p tax on that element of that bit of their pay on which they previously paid 10p tax.
Mr Darling told BBC One's Andrew Marr programme on Sunday that he recognised when the 10p rate came into effect "we would need to do more to help people, particularly on low incomes".
There has been outspoken criticism of the PM over the tax move, with Mr Brown admitting that mistakes had been made.
"This is an area I will be returning to in future budgets because I think it's right that we continue to do everything we can to help people, especially people at the lower end of the income scales," he added.
Tory leader David Cameron, who says the 10p tax row will be a key part of their Crewe and Nantwich by-election campaign, said Labour was "beginning to resemble a sort of bizarre soap opera".
He also met Mr Field and former whip Greg Pope last week to give a "categoric assurance" he will help people hit by the abolition of the 10p tax rate.
Lib Dem leader Nick Clegg said: "I don't want to intrude into the internal grief of the Labour party: Labour figures seem to be doing a good enough job tearing strips off each other for anyone else to contribute."
The scrapping of the lowest rate of income tax came into effect last month, alongside a reduction in the basic rate of income tax from 22p to 20p and increases in child benefit and tax credits.
'Unhappy'
The government has said it will outline a compensation package for pensioners aged 60 to 64 and low earners before this autumn's pre-Budget report.
Tuesday's Cabinet meeting, which was described as "focused, business-like and determined", follows a number of turbulent weeks for Mr Brown and his ministers.
On Monday, the government had a comfortable majority during a vote on human embryo research. But Labour MPs will have a free vote on some of the more contentious issues next week.
That followed Mr Field's suggestion that Mr Brown was "unhappy" as prime minister and would step down by 2010.
He also claimed the prime minister was prone to "tempers of an indescribable nature" and should talk to his loved ones and "see what they say and act on their advice".
'Soap opera'?
Those comments prompted Schools Secretary Ed Balls, a close ally of Mr Brown, to cast doubt over whether Mr Field's "intentions were honourable" over the 10p tax rebellion.
And Community Secretary Hazel Blears said it was "sad" Mr Field had "descended" into a personal battle.
At Tuesday's weekly meeting of the Parliamentary Labour Party, MPs and peers were said to be frustrated at the "self indulgent" in-fighting and called for more self-discipline.
Tory leader David Cameron said the Labour Party was "beginning to resemble a sort of bizarre soap opera".
Next week the 10p issue will come to prominence again as the Tories make it a central issue in their fight to win the Labour seat of Crewe & Nantwich.
The constituency was held by the late Labour stalwart Gwyneth Dunwoody with a majority of over 7,000.
Ministers and Labour MPs have been ordered to travel to Crewe to help secure the election of Mrs Dunwoody's daughter Tamsin on 22 May.
Conservative leader David Cameron said his party would be giving it their best shot, saying a Tory win would send a clear "message" to the PM that he needs to do more to help those hit by the 10p tax rate's axing.
Edward Timpson is standing for the Conservatives. Elizabeth Shenton is the Lib Dems' candidate.
