Labour is poised to back scrapping Universal Credit as part of a major shift over the Tories' notorious six-in-one benefit.
A party source told the Mirror talks are under way about raising the radical proposal at next week's Labour conference in Brighton.
It comes after a year-long review by Labour said the UC brand is "toxic" and needs "transformative change".
It is thought there is not yet a firm, detailed plan to axe the welfare reform, accused of driving families to food banks, rent debt and even sex work since it launched in 2013.
But it is understood senior figures are in talks about bringing a more general report and vote on welfare policy before Labour's conference next week.
A source said scrapping UC and replacing it with a fairer system would be the long-term "direction of travel".
Meanwhile in the short term, Labour would try to fix the system by axing the "punitive sanctions regime", though not necessarily all benefit sanctions, the source said.
Other short-term fixes would include ending the two-child limit on benefits, the five-week wait for a person's first UC payment, and the cruel benefit freeze.
A Labour source said: "It is clear that Universal Credit is not working. We need a social security system that does provide that holistic support from cradle to grave".
Labour's 2017 manifesto pledged to "reform and redesign" Universal Credit, which has more than 2million claimants.
But the party went further a year ago when it launched a year-long review into the entire benefits system.
At the time, Shadow Work and Pensions Secretary Margaret Greenwood said she would not rule out scrapping UC entirely as part of the review.
Labour set up a major Policy Commission which took evidence from MPs, members, campaigners and charities.
An "overwhelming number" of people who contributed to the review demanded UC is scrapped or radically overhauled.
The Commission's report recommends an "immediate rescue package" followed by "broader policies to bring about transformative change".
The report adds: "There was a clear message from submissions that Universal Credit is now so synonymous with cuts and hardship that the brand itself has become 'toxic'."
The report also said "Universal Credit cannot continue in its current form", adding: "The largest cuts to Universal Credit have come in the form of cuts to work allowances and the four-year freeze on working-age social security payments.
"The submissions received demonstrate that addressing these two policy areas should be immediate priorities for the next Labour government."
Labour's final policy for a general election would only be decided weeks in advance, when senior figures hold a 'Clause V' meeting to finalise the party's manifesto.
Former Tory Work and Pensions Secretary Damian Green told the Telegraph, which first reported the Labour proposals, it would be "unbelievably stupid" to scrap UC altogether.
Last year the National Audit Office warned UC is now so far advanced it is too late to turn back to the old system.
The NAO said in June 2018 that despite "many problems", "there is no practical alternative to continuing with UC" and £1.3bn had already been invested in setting it up.
Separately, the Mirror has campaigned to stop the rollout of UC and replace it with a fairer system.
A Labour Party spokesman declined to comment.