The move is set to anger hard line Brexiteers from her party who have already accused the Prime Minister of backing down from a hard Brexit.
EU negotiators are expecting Britain to accept the divorce costs of around £40 billion and also agree on a way to ensure the legal rights of EU citizens living in the UK.
David Davis has already announced a u-turn which will allow EU citizens in the UK to appeal to British courts using European law.
The Brexit Secretary also hinted other concessions would be made when reaching a deal with the EU.
It is thought there could be an agreement with the EU which would see the UK give the go-ahead for divorce costs of £40 billion and the residency rights of Europeans in the UK.
While the EU will allow some room for compromise on transition arrangements.
The compromise according to The Times could be formally agreed on October 19, some two weeks after the Conservative Party conference.
EU bosses say that not enough progress has been made on major issues such as citizens’ rights, Northern Ireland and the final figure for the divorce bill.
Downing Street had been hoping that the Prime Minister’s speech in Florence last week – in which she proposed Britain would continue to pay into EU coffers for a two-year transition period – would help talks.
It’s thought that the paying into the EU during this period would cost Britain some £20 billion.
Earlier this month dozens of Tory MPs signed a letter telling Mrs May not to back down from a hard Brexit.
The letter called on her to stop paying money to Brussels after March 2019.
The letter also said remaining in the single market would be “a mistake.”
Brussels’ chief negotiator Michel Barnier warned Britain could face months of wrangling before the EU is ready to open talks on future trade deals.
He has also expressed his wishes for Britain to pay its long standing spending commitments to the EU which is thought to total some £230 billion.