Influential Labour MPs believe a new "paper review" of the evidence will almost certainly lead to a formal British apology for the events of Bloody Sunday, when 14 people were shot dead by members of the Parachute Regiment in Derry in 1972.
The sources confirmed their expectation following yesterday's report in The Irish Times that the Northern Ireland Secretary, is to make an early response to the body of evidence compiled by the previous Irish government.
That report has been the subject of continuing discussions between the Northern Ireland Office and the Ministry of Defence in London. The Labour sources said they did not believe the British government would agree to any form of legal or quasi-judicial inquiry. However, one option, which has been canvassed on the Labour back benches, is for the appointment of a two or three-person team - headed by a lawyer - to conduct a final "paper review" of the evidence and recommend an appropriate response.
The expectations in Irish and other circles is that Dr Mowlam's statement could come by the beginning of November.
An apology for Bloody Sunday would be seen in nationalist circles as an important development of the commitment to "confidence-building measures" manifested by Dr Mowlam in her conference speech here on Tuesday.
Dr Mowlam attracted further unionist criticism yesterday when she confirmed that - in addition to scrapping the power of internment - the government is considering further radical changes to anti-terrorist legislation. "What we want to do is look at how Europe and how America are responding to terrorism," she told BBC Radio 5 Live: "Terrorists are changing their tactics and we want to see what lessons can be learnt from elsewhere and do what we have always argued - the PTA should go and we should look at new legislation that responds to new forms of terrorism."
Meanwhile, the Labour leadership saw off threatened party revolts on rail re-nationalisation and the imposition of university fees.
The prospect of a Labour conference revolt over university tuition fees dissolved as the Education Secretary, Mr David Blunkett, won a standing ovation from delegates.
After his strong defence of the government's proposals, and with only two speakers backing the motion condemning the plans, the motion's proposers agreed to refer back for further deliberation rather than pressing to a vote.
And another barnstorming speech from Mr John Prescott, the Deputy Prime Minister, headed off the threatened revolt over railway ownership. Mr Prescott pleaded with delegates in Brighton not to commit the government to a repurchase package of Railway Track which, he said, would end up putting £4 billion into the pockets of "fat-cat" shareholders.
PA adds:
The Sports Minister, Mr Tony Banks, last night apologised for making what he admitted was a "tasteless" remark about the Tory leader, Mr William Hague.
The outspoken and often controversial minister came under fire from Conservatives for calling Mr Hague a "foetus" at a fringe rally at the Labour Party conference in Brighton.
Mr Banks, who also made jokes at the expense of fellow minister Mr Peter Mandelson, told the meeting that Tory MPs had "elected a foetus as party leader".
Encouraged by the laughter, he went on: "I bet there's a lot of Tory MPs that wish they hadn't voted against abortion now."
But in a press statement later, Mr Banks said: "This was a tasteless remark, uttered off the cuff."