India's government has approved a new anti-corruption bill which will be tabled in parliament this week.
The Lokpal bill envisages setting up an independent ombudsman who would have the power to prosecute politicians and civil servants.
However, the government has not agreed to put India's Central Bureau of Investigation (CBI) under its ambit, a key demand of activist Anna Hazare.
Mr Hazare has announced a three-day fast next week in protest.
Mr Hazare's 12-day anti-corruption fast in August became the focus of a national campaign and put pressure on the government to act on the issue.
The ongoing session of parliament has been extended by three days to give it time to take up the bill.
Media reports say that the bill approved by the cabinet on Tuesday evening proposes to keep India's top investigation agency, CBI, out of the control of the ombudsman.
In other words, the nine-member Lokpal committee - which will comprise the ombudsman - will not have it own investigative agency, a major demand of anti-corruption activists like Mr Hazare and many opposition parties, reports say.
Instead, the government-controlled CBI will take on cases assigned to it by the ombudsman, and these investigations will be carried out within 180 days.
Mr Hazare's aide Prashant Bhushan said the government was not giving the CBI up because its "intentions are unholy".
"Corruption always involves the government and therefore having a government-controlled agency will result in conflict of interest," he was quoted as saying by The Indian Express newspaper.
The government has also kept outside the ambit of the ombudsman a "citizen's charter" for the timely investigation of public grievances against the government, another demand of Mr Hazare.
Instead, it is expected to table a separate citizen's charter bill in parliament which makes it mandatory for every government ministry and department to act within 30 days on public complaints about services.
Mr Hazare criticised the proposal and said it "again proves that the government's character is not clean".
"The government is bringing many bills instead of one. Let the government go its way, we will go our way," Mr Hazare said, while announcing that he would go on a three-day hunger strike beginning 27 December in protest.
Among other things the bill proposes that
the prime minister will fall under the ombudsman's remit, with some conditions which relate to matters of external affairs, atomic energy and national security, reports say.
a part of the lower bureaucracy will come fall under the ombudsman's remit
Correspondents say the stage is set for a fresh confrontation between the government and Mr Hazare and the opposition over the contents of the new bill.
Lokpal battle lines drawn again, The Indian Express newspaper said in a headline on Wednesday.
India has recently been hit by a string of high-profile corruption scandals, badly damaging the government's reputation.
Among them are an alleged multi-billion dollar telecoms scam, claims of financial malpractice in connection with the Delhi 2010 Commonwealth Games and allegations that houses intended for war widows ended up in the hands of civil servants.
A recent survey said corruption in India had cost billions of dollars and threatened to derail growth.