Home Secretary Theresa May will tell MPs on Monday that the Government intends to opt out of a raft of EU police and justice measures.
In a move that will delight eurosceptic Tory backbenchers but inflame coalition tensions, she is expected to use a Commons statement to confirm plans to exercise a treaty right to withdraw from 130 cross-border agreements including the European arrest warrant.
But Liberal Democrats said agreement on the issue was "not even close", amid continued dispute over which parts of the package Britain should negotiate to re-enter if it does deploy the all-or-nothing opt-out.
As pressure mounted from within his party to renegotiate British membership of the EU and seize back powers, Prime Minister David Cameron declared during a visit to Brazil last month that Britain "will be exercising that opt-out".
Deputy Prime Minister Nick Clegg retorted that nothing had been decided and that national security and public safety needed to be safeguarded before any agreement could be reached.
The arrest warrant system is particularly contentious, with Tory opponents arguing it has led to British citizens facing unfair trials abroad but Mr Clegg and others point to its use to return suspects - such as runaway teacher Jeremy Forrest - to the UK.
News that Theresa May will reinforce the Government's intention to press ahead was welcomed by Tory MP Dominic Raab, who was among the leaders of a 100-strong group which demanded the move in a letter to the premier earlier this year.
"Given rising demand for Britain to renegotiate its wider relationship with the EU, this is a test for them as much as it is for us," he said - calling for a fresh start based on "practical cooperation not giving up democratic control".
A senior Lib Dem source played down the significance of the statement however - claiming Mrs May did not have the authority to go beyond the Government's stated position of being "minded" to use the opt-out while detailed talks continued.
"They won't be able to say that we are definitely opting out...until we are a lot closer to agreement about what we would opt back into," they said - which meant going through all the 130 elements "one by one".
It comes after it was reported that Education Secretary Michael Gove wants the UK to threaten to pull out of the EU altogether unless important powers are returned to the UK - and would vote to quit if there was an in/out referendum.
Defence Secretary Philip Hammond said his Cabinet colleague was reflecting a wider change of mood.
"The point that Michael is reflecting - and many of us feel - is that we are not satisfied with the current relationship," he said.
"The mood has changed...because for the first time in a decade, those of us who are uncomfortable with the way that relationship has developed see an opportunity to renegotiate it.
"It makes sense for Britain to be in the single market but to reset the relationship so we have a balance of competences which works for Britain and the British people."