Ministers want to cut prison numbers by 3,000 by 2015 Proposals to allow criminals to serve only half their sentences if they plead guilty at an early stage is set to be dropped entirely, the BBC understands.
The idea was attacked by many Tory MPs and victims' groups - especially after it emerged it might apply to rapists.
Government sources ruled that out earlier this month, but the policy was expected to be retained for a number of lesser crimes.
Labour say the plans were cost-driven and lacked public support.
As recently as last month, ministers were talking about the possibility of extending the existing 33% "discount" on jail sentences in England and Wales for offenders pleading guilty at the earliest opportunity to 50%.
But the idea came in for sustained criticism from sections of the media, which intensified after Justice Secretary Ken Clarke seemed to suggest that some rape cases were more serious than others.
Confirmation the plan is being ditched is expected on Tuesday as ministers outline details of their proposed Sentencing and Legal Aid Bill - which they hope will become law by next April.
The BBC's Deputy Political Editor James Landale said the move - which has not yet been confirmed by Downing Street - would mean that Mr Clarke would now have to find other ways of finding £130m in savings which he hoped to generate from the plan.
Ministers have been consulting on a range of ideas intended to strike a balance between protecting the public, tackling reoffending and lowering prison numbers.
Last December, Mr Clarke set out plans to cut the prison population by 3,000 in England and Wales and toughen non-custodial sentences as part of efforts to cut the prison and probation bill by 20% over four years.
Ministers consulted on plans to limit the use of indeterminate sentences - minimum tariffs for imprisonment - release more defendants on bail and increase the use of community sentences.
Sadiq Khan Shadow justice secretary“An effective criminal justice system should protect the public, punish and reform offenders, support victims and ultimately cut crime”
But the debate over their approach was dominated by the controversy over the 50% discount plan.
After being challenged by rape victim Gabrielle Browne about it in a BBC interview last month, Mr Clarke was forced to apologise for "giving the impression" that not all rape cases were equally serious.
However, after a personal meeting with Mr Clarke later, Ms Browne said she accepted the logic of the government's thinking and the move could mean fewer rape victims having to go through the ordeal of reliving their experiences in court and coming face-to-face with their attacker.
Although it introduced the 33% discount while in government, Labour said an extension to 50% - which had won the backing of penal reform campaigners - was "ludicrous".
"An effective criminal justice system should protect the public, punish and reform offenders, support victims and ultimately cut crime," shadow justice secretary Sadiq Khan said.
"If they proceed with their ludicrous policies of cutting sentences by half for criminals that plead guilty early, taking away the power of judges and magistrates to hold people in custody on remand and letting people out early who could be a threat to public safety, that damage could be irreparable."
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Source: http://www.bbc.co.uk/go/rss/int/news/-/news/uk-politics-13847999
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