The Star understands that ministers will announce within weeks a deal which will see insurance companies agreeing to make compensation payments of around £5,000 to individual pleural plaque sufferers.

Westminster sources say Gordon Brown has personally taken an interest in efforts to broker a deal.

Last October, Law Lords upheld an Appeal Court ruling that pleural plaques sufferers were no longer entitled to compensation.

The decision was a devastating blow to former workers who had been diagnosed with the condition - a scarring of the lungs which can be a forerunner of deadly asbestosis and mesothelioma.

Insurance companies, which stood to gain £1.4 billion from the decision, had argued pleural plaques should not be a reason for compensation because they are symptomless and do not have any effect on health and ability to work.

However, The Star understands the Government has made it clear behind the scenes that it is prepared to change the law and overturn the Law Lords if insurance companies refuse to back down.

Sources claim insurers have also increasingly become worried that they face years of fighting costly legal cases brou
ght by trade unions on behalf of pleural plaque sufferers.

Ministers are now confident the major insurance companies will voluntarily agree to make a fixed payment to anyone who is diagnosed as suffering from pleural plaques.

This is likely to be around £5,000 - the average payout before the Appeal Court judgment.

The insurers are understood to be likely to agree to the arrangement because it will give them certainty over how much they will be paying out to sufferers in the long-term.

They will also hope it will persuade ministers not to beef up the regulation of the insurance industry in future years.

Sources have even claimed the deal was used to encourage Labour backbenchers, who were considering rebelling during Wednesday's debate on the EU Treaty, to toe the party line.