Tory MPs reacted with fury after it was claimed the coalition is poised to introduce legislation to give prisoners the vote.
According to the Guardian, ministers are preparing to launch a draft bill to comply with a ruling by the European Court of Human Rights (ECHR).
However, a government source told the newspaper that a final decision was unlikely to be taken until late November - after police commissioner elections.
The move would set the stage for a another major showdown between David Cameron and Eurosceptic backbenchers.
The Commons voted by an overwhelming margin of 234 to 22 in February to maintain the blanket ban rather than ease it in line with the judgment. Although the motion was not binding on the coalition, the Prime Minister indicated he intended to defy the court - saying the idea of allowing prisoners to vote made him "physically ill".
But there are concerns the Government could face a huge compensation bill if it does not bring forward reforms before the ECHR's deadline of the end of November.
Publishing draft proposals, potentially giving the vote to those serving terms under four years, would give ministers breathing space as it would take a long time to reach the statute books.
Government sources played down the speculation, insisting that no decision had yet been taken. But the reports drew an immediate response from Conservative backbenchers.
Nick de Bois, secretary of the influential 1922 committee, posted on Twitter: "Sitting working with 5 other Cons MPs - if reports of prisoner voting rights are accurate then that's 6 MPs who won't vote for it." Tory colleague Douglas Carswell added: "Make it 7."
Richmond Park MP Zac Goldmith wrote: "MPs almost unanimously rejected votes for prisoners. If it happens all the same, does that mean the UK Parl officially no longer matters?"