The White House is preparing to compromise amid a growing row with religious leaders over a new rule on providing contraception, reports say.
US President Barack Obama is expected to make an announcement on Friday.
Catholic leaders have been angered by a new rule requiring Church-linked institutions to offer health insurance including birth control.
The debate has pushed social issues to the fore during an election season so far dominated by the US economy.
Word of the compromise comes shortly after the top Republican in the US Congress joined the outcry against the contraception rule.
House Speaker John Boehner said legislation was needed to prevent the rule coming into force.
The issue is also expected to be a key rallying point for Republican presidential candidates at a major conservative conference in Washington on Friday.
Under the current White House plan, Church-linked institutions must cover birth control costs in their health insurance plans.
Churches and other houses of worship were given a waiver under the new law, but institutions including Catholic universities and hospitals are not exempt.
Catholic leaders say that would force them to violate religious beliefs.
Under President Barack Obama's healthcare reform law, employers must offer insurance that includes contraceptives.
The uproar began over the weekend, after US Health Secretary Kathleen Sebelius defended the policy in an editorial for USA Today.
Catholic bishops called for the rule to be dropped, including Archbishop Timothy Dolan of New York, who wrote in an editorial for the Wall Street Journal that the mandate was "an unprecedented incursion into freedom of conscience".
The Obama administration has sought to portray the issue as a balance between religious freedoms and preventing discrimination under the new healthcare law.
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