Drivers would be able to park on double yellow lines for 15 minutes under proposals to boost trade in high street shops.
Communities Secretary Eric Pickles wants to introduce a "grace period" that would allow motorists to pop into local shops without being hit by hefty penalties.
Higher fines could be introduced outside London for motorists who park dangerously in order to secure support for the move.
A source close to Mr Pickles told The Daily Telegraph: "The high street is in danger of shrinking or dying off, and over-aggressive parking enforcement is part of the reason why.
"If people are worried about paying a fortune in parking fines, it will make them more likely to do their shop online or go to out of town shopping centres. For too long, parking has been a revenue raiser. It's time to end that.
"There is room for a deal (with the Liberal Democrats). Dangerous parking is a menace to people, whereas if you're in the parking bay or just on the side of the road you're not presenting any risk."
Local Government Minister Brandon Lewis said councils needed "to play their part in reining back in the over-zealous culture of municipal parking enforcement".
"They should adopt a common-sense approach. Ministers are considering what further steps can be taken to ensure that town hall parking policies and practices support local high streets."
However, Lib Dems warned the plans could be flawed and are reportedly keen to raise the current £70 cap on fines for all illegal parking outside London.
Lib Dem Transport Minister Norman Baker told Sky News: "The idea of actually having cars parked for a very long period of time on a double yellow line actually undermines the purpose of a double yellow line and I am advised it is unworkable."
In contrast, Lib Dem Business Secretary Vince Cable said: "I have a lot of sympathy with what Eric Pickles is trying to do.
"I think a lot of small businesses are driven to distraction by over-zealous enforcement of parking rules, so I think a little bit of common sense and flexibility is very much to be welcomed."
A Tory source added: "It seems Norman Baker is increasingly isolated, fighting a one man war against motorists that is out of sync with the rest of the coalition."
However, the yellow-line proposal received a mixed reception from the motoring industry.
AA president Edmund King said: "Rather than just allow drivers to park on double yellow lines, a thorough review of the lines would be more effective.
"Many double lines are there for historical reasons and could be lifted. There is plenty of opportunity to ease back on the signs and lines in many places, giving drivers short-term waiting bays instead, so they can stop briefly to buy a paper or loaf of bread."
He added: "Local authorities should be encouraged to do what the Government does with regulations - 'one in one out' - so that yellow lines do not run out of control.
"Lifting restrictions on yellow lines should not be an excuse for hiking parking penalties outside London."
RAC Foundation director Professor Stephen Glaister said: "We should be careful what we wish for.
"Drivers are already able to make limited stops on double yellow lines and while we support a common sense approach to parking policy, businesses are as likely to be adversely affected by a parking free for all as they are by draconian restrictions."
The Government has previously issued guidance to councils, encouraging them to attract shoppers by setting competitive parking charges and urging them to improve the quality of parking in town centres.
Tory local government minister Brandon Lewis said: "This Government has scrapped Whitehall rules that previously told councils to hike up parking charges, adopt draconian enforcement and impose arbitrary limits on off-street parking spaces.
"Councils now need to play their part in reining back in the over-zealous culture of municipal parking enforcement".