Ministers are hopeful the Premier League will abandon its parachute payment model to instead create an annual fund worth up to £200million to support the Football League.
England’s top tier is understood to have expressed a willingness to radically change the solidarity model as part of a long-term strategic review which coincides with the collapse of Project Big Picture proposals.
The major reform was among a host of issues discussed between the key stakeholders in the game on Tuesday after they were summoned to a meeting with Oliver Dowden, the Culture Secretary.
Also on the agenda was the rise in abuse facing players online, and Government is understood to have signalled it will work closely with football to pressure the social media giants to introduce tougher curbs.
The abandonment of parachute payments would be a major victory for figures in Westminster and the lower league clubs, both of whom argue the current model of handing huge sums to a relegated club for several years distorts competitiveness.
However, proposals to put the entire pot of money into a EFL solidarity fund could be met with stiff opposition from some of the smaller Premier League clubs when it is put to any vote.
The Digital, Culture, Media and Sport Committee, which is independent of the ministry, had been calling for parachute payments to be abandoned as part of a dramatic "reset" since July.
The big clubs, earning hundreds of millions in TV money, were singled out for particular criticism after MPs agreed with Rick Parry, the EFL chairman, who called for an "overdue and necessary" restructuring of football finances in England.
At Tuesday’s meeting, Parry is understood to have expressed disappointment that some of the key proposals in PBP, a revolutionary concept first reported by the Daily Telegraph last month, were dismissed out of hand by the top tier.
A fan-led review of governance, as outlined in the Conservative pre-election manifesto, and proposals for an independent regulator were also discussed at the meeting.
David Bernstein, the former Football Association chairman, was among a host of figures to address the meeting. "It was very positive that the secretary of state called this meeting and it was important to have all players around the table," he told the Daily Telegraph.
"There was a great deal of discussion and contribution but no decision was made. As set out in our manifesto for change, my colleagues – including Gary Neville and Andy Burnham – and I are looking for radical measures to bring serious reform to English football and remain with the strong belief this can only be achieved by the appointment of an independent regulator."