Nick Clegg will next year outline plans for the most far-reaching changes to the House of Lords since landmark reforms 100 years ago by a Liberal government ended the upper house's ability to block Britain's annual budget.

In a move to shore up the position of the beleaguered Liberal Democrats, the cabinet will endorse the deputy prime minister's plans for the upper chamber to be overwhelmingly composed of elected members. It is expected that the cabinet will agree that 80% of the new house should be elected.

David Cameron, who has grown increasingly alarmed in the past month at the personal attacks on Clegg, hopes such historic changes will strengthen the Lib Dems.

"Clegg is having a rotten time," one cabinet source said. "So you can see how allowing Nick Clegg his moment in the sun on a major constitutional reform will be a boost for the Lib Dems. Their supporters need no lessons on the significance of introducing major reforms to the House of Lords in 2011."

Next year marks the centenary of the 1911 Parliament Act, passed after peers rejected David Lloyd George's People's Budget of 1909, which introduced a massive redistribution of wealth.

Clegg may find he has a battle within the cabinet once he has outlined his plans. Some senior Tories believe Cameron will quietly live up to his pre-election commitment to ensure that reform of the House of Lords moves slowly when a joint committee of both houses of parliament is established after the publication of Clegg's blueprint.

"I'm sure we will have a great fanfare of reform on the centenary of the 1911 Parliament Act," one senior figure said. "Thereafter it won't be so much a case of kicking it into the long grass – we'll be looking to park it in grass that is around the height of a giraffe."

Traditionalists hope reform of the Lords will move at a similar pace to the process under the last government. All but 92 of the hereditary peers were expelled in 1999. The second stage of Lords reforms – removing all the hereditary peers and introducing an elected element to the upper house – moved at a glacial pace over the following decade. A year after the removal of the hereditary peers, a royal commission was set up under the chairmanship of Lord Wakeham.

A joint committee of both houses, established in 2002, set out seven options for reform. The House of Lords voted by three to one in favour of a fully appointed house. MPs defeated all seven options, though the option that attracted the highest support was for a chamber with 80% elected members. In 2004 the government dropped plans to reform the upper house in the face of opposition from peers.

Tony Blair, who expressed unease in early 2005 about a "hybrid" house with elected and appointed members, pledged in the Labour manifesto for that year's general election to remove the remaining hereditary peers and to "allow a free vote on the composition of the house".

Little happened in the last parliament. Labour pledged in its general election manifesto this year to hold a referendum to create a "fully elected second chamber" in two stages. The Tories said they would "work to build a consensus for a mainly elected second chamber". The Lib Dems pledged to "replace the House of Lords with a fully elected second chamber with considerably fewer members than the current house".

Clegg will depict his reforms as the most far-reaching changes to the upper house since 1911, outflanking the 1949 Parliament Act and the removal of most hereditary peers. The 1949 act reduced the time for which peers could block non-money bills from two years to one.

The 1911 Parliament Act famously prevented the House of Lords from delaying for any longer than a month "money bills" dealing with taxation.

The Lords eventually accepted Lloyd George's 1909 budget in April 1910, three months after a general election which had resulted in a hung parliament with a Liberal government supported by Labour and Irish nationalist votes. The Lords passed the 1911 act, limiting their powers, after the Liberals threatened to introduce scores of new peers to ensure its passage.