Ministers are to unveil reforms of the community lending firms today.
Britain's credit unions are to be allowed to expand under new government plans, the BBC reports.
Sources familiar with the situation have told the broadcaster that the new policy - which could see the unions allow to strike deals with other firms and housing associations - will be announced later today.
Credit unions function as community-based loans and savings firms, which extend credit to and accept deposits from customers who have difficulty in finding loans elsewhere. They are viewed by many people on low incomes as a preferable alternative to "loan shark" sub-prime lenders, which often charge punitive interest rates.
These local unions are restricted by law from expanding beyond their immediate community through a measure known as the Common Bond. Under the terms of the proposals, however, this bond would be relaxed - effectively extending the unions' services to many more people.
Rising food and fuel prices - which have caused the government's benchmark inflation rate to hit 3.3 per cent, a full 1.3 per cent above target - have also provided an impetus for the relaxation of the rules. This is because changes in day-to-day living costs tend to hit those on low incomes the hardest.
The credit union reforms are to come into effect by this time next year.
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