Politicians have reached a deal on plans to create a tough new press regulator, Labour's deputy leader Harriet Harman has told Sky News.
However, a Downing Street source insisted cross-party agreement was "very close", and there would be further talks this morning.
The details are expected to be revealed in the House of Commons later, but it appears a Royal Charter will be created, underpinned by law, so that it cannot be watered down or changed.
Asked if a deal was as good as done, Ms Harman said: "Yes, agreement has been reached.
"I think it's incredibly important that really for the first time we'll have a proper complaint system. The press will still be a free press - that is absolutely essential in a democracy.
"But also victims of press abuse, if the press overstep the mark, invade people's privacy, turn people's lives upside down in the way they have to people like the Dowlers and the McCanns, there will be a proper complaint system with an independent complaints panel which will have proper teeth to require proper corrections and apologies.
"So I think it is a very, very good agreement that has been reached. So probably there won't be a vote in the House of Commons this afternoon. It will be discussed, But I think, really, all sides are going to be agreeing to it."
The Conservatives, Labour and the Liberal Democrats are understood to have held talks for more than five hours.
David Cameron - faced with a possible defeat in a House of Commons vote on the issue - was not present but was represented by Oliver Letwin, who has been the key figure for the party in recent negotiations.
The eleventh-hour talks came after Culture Secretary Maria Miller hinted at a "Labour climb-down", claiming Ed Miliband's party was now "much closer" to the Tories' position.
But Labour claimed the deal would be based on their plans for a Royal Charter underpinned by law.
Mr Cameron has been clear that he is very uncomfortable with the idea of setting anything down in law because it could be seen as politicians meddling with the press.
However, it is understood a compromise has been reached to include three lines of Statute - a clause in the legislation to ensure that the Royal Charter can not be amended in the future without two-thirds majorities in both Houses of Parliament.
There will be no industry veto of who sits on the regulator, and there will be a specific rule to ensure apologies are proportionate.
Mr Cameron, who last week pulled out of talks about implementing Lord Justice Leveson's recommendations, previously warned that legislation would endanger press freedom.
Labour leader Mr Miliband, Deputy Prime Minister Nick Clegg and Ms Harman attended the talks.
Actor Hugh Grant, who is leading the Hacked Off campaign for tighter controls in the wake of the hacking scandal, has accused the Prime Minister of turning his back on victims of press intrusion.
Harry Potter author JK Rowling has also spoken out, saying Mr Cameron's actions had left her feeling "hung out to dry".
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