The coalition is close to a deal on reforming control orders after weeks of wrangling, the BBC understands.
The Lib Dems, who campaigned in opposition for them to be scrapped, are understood to be ready to accept a ban on travel for terror suspects.
The Home Office has argued that some form of restrictions on terror suspects was essential to protect the public.
The orders, which can include 16-hour curfews, electronic tags, travel and phone curbs, came into force in 2005.
Control orders - in which terrorist suspects are placed under close supervision and which critics compare to house arrest - were brought in to replace the detention without trial of foreign suspects, which the law lords ruled breached human rights.
Before the election the Conservatives pledged to review control orders, while coalition partners the Lib Dems promised to scrap them completely.
The Office for Security and Counter-terrorism - operating from inside the Home Office - is currently reviewing the system and the BBC understands that the basis for a compromise is now in place.
Senior Liberal Democrats are understood to be ready to accept a ban on travel for terror suspects.
Similar travel bans are applied to other potential offenders such as those suspected of planning football violence. They are also ready to accept some restrictions on use of telecommunications.
It is understood, for example, that mobile phones and computers could be used by the suspects under certain conditions.
The Lib Dems also believe that enhanced surveillance could be used rather than long curfews. Although this is more expensive, it is likely to be acceptable as so few people are subject to control orders.
The terminology would be changed and a new name given to control orders.
And the Lib Dems are insisting that any future terror suspects be subject to the new regime as a precursor to prosecution, not as an alternative.
But as the final deal has not yet been done, senior Lib Dems accept that changes should not be rushed through and it seems likely they will agree to renew temporarily the existing control orders in place.
The final details of the scheme are not likely to be published until after Christmas.
But any deal will have some opposition within the coalition. The former shadow home secretary David Davis has told the BBC this "control order-lite regime would be a disaster".
The man who is overseeing a review of counter-terrorism laws, told MPs on Tuesday that "a lot of work" had been done on possible alternative schemes.
Former Director of Public Prosecutions Lord Macdonald, now a Lib Dem peer, said "many options" were being considered, including keeping them, abolishing them entirely or "replacing them with some other scheme which is different from control orders but provides some form of reassurance".
The previous Labour government argued it had to control some suspects who could not be prosecuted because secret intelligence is not allowed in British trials.
But shadow home secretary Ed Balls indicated last month that, if police and security services could persuade the home secretary that alternatives could work, Labour should support a change.