Politicans are nearing a deal on plans to regulate the press, sources close to the Prime Minister have told Sky News.
The three main parties have been holding eleventh-hour talks as MPs prepare for a crucial vote in the House of Commons.
A Downing Street source said a deal was now "close", while Labour sources they were "confident we have the basis" of a cross-party agreement.
Labour and the Liberal Democrats had clashed with the Conservatives over plans for a new media watchdog, insisting the Royal Charter must be underpinned by law.
It raised the prospect of a defeat for David Cameron, who last week pulled out of cross-party talks about implementing Lord Justice Leveson's recommendations.
However, Sky sources understand the Prime Minister met Lib Dem leader Nick Clegg on Sunday to try to resolve their differences, with talks continuing throughout the night.
Culture Secretary Maria Miller previously hinted at a "Labour climb-down", claiming Ed Miliband's party were now "much closer" to the Tories' position.
But a senior Labour source told PA the party is in "lock-step" with the Lib Dems, adding: "We are clear we are not going to accept their Royal Charter. Any agreement must be on the basis of our Royal Charter."
Actor Hugh Grant, who is leading the Hacked Off campaign for tighter controls in the wake of the hacking scandal, accused the Prime Minister of turning his back on victims of press intrusion.
"For him, politically, it was more important to suck up to the newspapers than to fulfil the promise that he made under oath," he told Sky News.
"(He said) that what mattered as an outcome to all this was that those victims should never be subject to those kind of abuses again."
Harry Potter author JK Rowling also spoke out, saying Mr Cameron's actions had left her feeling "hung out to dry".
"Monday's vote will make history one way or another," she said. "I am merely one among many turning their eyes towards Ed Miliband and Nick Clegg and hoping that they have the courage to do what Mr Cameron promised, but which he failed to deliver."
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