The Northern Ireland Office is understood to be preparing a proposal for an independent body to be established to decide on the future of the Scots Guard killers of Peter McBride.
It is understood that the proposals are being drafted by a senior civil servant attached to the office of security minister Jane Kennedy.
The civil servant, who was previously attached to the office of Chris Patten during the reform of the police, is understood to be preparing a proposal that an independent commission is established to rule on whether Mark Wright and James Fisher should be allowed to stay in the British army.
It was last night confirmed that the civil servant was present during a meeting between the McBride family and human rights minister John Spellar last month.
He is also understood to have held talks with both the SDLP and Sinn Féin in recent weeks.
It is understood that the proposals, if approved by Secretary of State Paul Murphy, will be forwarded to Prime Minister Tony Blair who will make the ultimate decision on whether or not an independent commission is set up to look at Fisher and Wright.
An NIO spokeswoman last night insisted that there was no internal document relating to Fisher and Wright in existence. But a reliable source within the NIO last night confirmed that the proposal was being discussed at the highest level.
"If an independent commission was established it would allow all parties to bring closure on the issue," said the source.
"The government could say that it has dealt properly with the issue; nationalists could say this is what they have been calling for all along and the McBride family could say that this would be the first time that a truly independent body would have looked at the case."
But the source pointed out that any recommendation from the NIO would inevitably come up against stiff opposition from the Ministry of Defence, which has resisted repeated calls for Fisher and Wright to be dismissed.
"The MoD is very powerful in Whitehall and will fight tooth and nail to resist any attempt to have any independent commission deciding on Fisher and Wright.
"Ultimately it will be Tony Blair who decides on whether or not this body will be set up."
The suggestion of an independent commission to look at the decision to allow Fisher and Wright to remain as soldiers is nothing new.
In July, independent assessor of military complaints Jim McDonald said that the army's credibility would continue to be damaged until the issue of Fisher and Wright was settled.
"I would urge the army board to initiate a final appeal panel, drawn from people outside the military system, able to exercise publicly that crucial ingredient of independence and transparency which is now a requirement of good governance," Mr McDonald said.
