The proposal would give any member state that could convince EU governments its welfare system was under excessive strain a right to deny benefits to new workers arriving from other EU countries for up to four years.
That has been a key demand of Prime Minister David Cameron and one which many EU leaders have said risks conflict with citizens' treaty rights.
It would seem to offer the British leader a headline win in Brussels on which he could campaign to remain in the EU in a vote that may be held as early as June.
However, Cameron would still need to persuade EU leaders that a wave of labour migration to Britain over the last 12 years justified applying the emergency brake.
Several east European leaders, whose citizens have been the main focus of British unease at an influx of workers benefiting from income top-ups in low paid jobs, have said this month they could support some kind of brake.
Importantly, the proposal would not affect Poles, Romanians and others already working in Britain.
A spokesman for Cameron, who will meet the heads of European Union institutions on Friday and Sunday, declined direct comment on the proposal and said the prime minister for now stuck by his election campaign pledge to bar EU immigrants from in-work benefits for at least their first four years in Britain.
Saying there was "still more work to do", he welcomed the "constructive spirit" in which alternatives have been offered but played down any urgency in reaching a deal, noting that the deadline for holding the referendum is the end of next year.
EU spokespeople maintained their public silence on the talks and sources close to the negotiations stressed that no final deal was yet on the table, with a variety of issues unresolved.
But if Cameron's talks with European Commission President Jean-Claude Juncker on Friday and European Council President Donald Tusk on Sunday go well, a draft package may emerge early next week, raising the prospect of an accord at an EU summit on February 18-19, which Tusk will chair.
Referendum timing
With opinion polls tight and his Conservative party bitterly divided on Europe, many believe Cameron aims to hold the referendum sooner rather than later. Sources familiar with the negotiations said he wanted the option of a vote in late June.
He says he wants Britain to stay in the EU but has not ruled out campaigning to leave if he fails to secure changes he wants.
Other EU leaders, with their own electoral timetables, are keen to help Cameron win a vote and end the distraction that the "Brexit" debate has entailed for a Union struggling to cope with other divisive crises, including a refugee influx.
Cameron laid out in writing in November and in person at a summit in mid-December demands for EU reforms in four areas. The right to deter migration from other member states by withholding in-work benefits is by far the toughest sell and fraught with legal difficulties.
Officials have said simply allowing Britain to deny equal treatment on benefits to EU citizens exercising a fundamental right to work in other countries in Europe is flagrant discrimination in breach of treaty rights. But legal language that could protect Britain from EU court action might gain leaders' support if the overall impact appeared limited.
Cameron will discuss the emergency brake proposal over lunch on Friday with Juncker, whose executive institution would have to initiate any such legislation, the sources said.
One of the sources close to the negotiations said Cameron was keen to have a Commission proposal issued before the referendum, to demonstrate an urgency to voters for whom immigration is a priority issue.
"They're looking for something that will be usable quickly," this source said. "They'd like to claim what has happened already justifies taking emergency measures. They would like to paint the situation as already dramatic. The devil is in the detail."
"Red card", euro zone
If Cameron and Juncker agree, then a broader draft package could be approved at the dinner with Tusk in London on Sunday. Much of the rest of the package has already been broadly agreed, the sources said.
Tusk, a former Polish prime minister, would then circulate written proposals on reform to the other 27 EU governments early next week aiming to settle remaining disagreements over the next two weeks.
Among the other elements, the sources said, is a mechanism to allow a group of countries like Britain that do not use the euro currency to raise concerns about any measures taken by the 19-nation euro zone that they regard as discriminating against them. There would then be a special deliberation in the council of all 28 EU finance ministers.
However, Britain would not have a veto over euro zone decisions. London has said it does not seek one, but wants to defend the vital interests of its global financial centre.
The draft as it stands also offers a "red card" for groups of national parliaments to block EU legislation. A legally binding statement by EU leaders would spell out that an EU treaty commitment to the "ever closer union" of peoples does not oblige countries to integrate their political and economic systems any further with the bloc.
Negotiators say none of the proposals requires an immediate change in EU treaties but the draft will meet British concerns for a legally binding deal by promising to enshrine the text in any future treaty overhaul.
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