A draft Lords Reform Bill recommended the newly- created senators would earn less than an MP's salary – £65,700 – but more than an MSP's – £57,500 .
Now, however, Coalition sources suggest the proposed maximum pay level will be set at £45,000 – £300 a day with 150 sittings a year.
Labour peer Lord Lipsey claimed the price of reform could be as much as £484m over five years, a figure Deputy Prime Minister Nick Clegg dismissed as "nonsense".
The House of Lords Reform Bill, containing the Government's detailed plans, is expected to be presented to Cabinet today by Mr Clegg and published tomorrow with a Commons statement.
It is likely to include proposals for an 80% elected chamber with the number of members halved from the current 900 to 450.
It is thought the increase in senators from the original 300 has led to the proposed pay cut. Using a similar method of election to that in European elections, this would mean Scotland would have around 45 senators in the new-look chamber.
The issue of Lords reform has caused tensions between Conservatives and Liberal Democrats with some right-wing Tory backbenchers branding it "legislative vandalism".
There have even been suggestions of ministerial resignations over the matter.
Today, Chief Secretary to the Treasury Danny Alexander will seek to pressurise his Conservative Coalition colleagues by saying they have a "responsibility" to deliver Lords reform because it was in the main parties' manifestos.
In a speech to the Electoral Reform Society Conference in London, the Mr Alexander will say: "We all collectively should feel the pressure to deliver because it is what all political parties put in their manifestos.
"We should see that commitment through not because it is the number one thing that comes up on the doorstep but because it is the right thing to do; because in a democracy lawmakers should be elected."