Both sides hope to reach a settlement on 2 November, although the exact wording of the agreement has not been finalised and talks could still break down.
US state attorneys general, who have taken a harder line against a settlement than DOJ officials, are reported to have reviewed the proposed agreement on 31 October. Their acceptance of a settlement with Microsoft would remove one of the largest obstacles to ending the antitrust suit.
The proposed settlement would require Microsoft to give computer makers more latitude to determine how software applications are displayed on Windows-based computers.
The agreement would also set rules for how much Windows source code would have to be shared with outside software companies, and would create a technical committee to review disputes about such disclosures, sources said.
The settlement would expire after five years and would be extended by two years if it was found that Microsoft had violated the agreement.