The European Commission is expected to propose a reduction in CO2 emissions by cars to 130 grams per kilometer by 2012.
The limit is higher than the original cap favoured by environment commissioner Stavros Dimas, at 120 g/km.
Brussels argues that although the emissions goal is less ambitious than originally envisaged, its overall green targets would still be achieved by the use of biofuels and other technology in combination with car-makers' efforts, Reuters reported.
Moreover, after a 1998 voluntary scheme for the car industry failed to bring along a significant drop in greenhouse emissions by Europe's automobiles, the EU executive will now table binding legislation to achieve the reduction.
If adopted, the compromise would however come as a blow to Mr Dimas who pushed for a binding proposal on sharper reductions of car emissions, placing less emphasis on the effect of cleaner fuels.
The sensitive blueprint has been delayed for weeks due to internal wrangles inside the commission as well as indications by some member states - especially Germany as the biggest EU car-making country - that they would block the plan.
The dispute over the commission's climate agenda also produced criticism of Berlin, which currently holds the EU presidency.
After weekend remarks by Mr Dimas criticising Germany for its lack of interest in curbing climate change, commission president Jose Manuel Barroso made a similar statement talking to a magazine serving the German parliament, Das Parlament.
He argued it is "unfair" that Berlin opposes the pollution target for the country's industry as proposed by the EU executive.
"We cannot simply tailor our criteria to the wishes of individual member states. That would be inappropriate and unfair," said Mr Barroso.