The revised Bill incorporates a number of changes recommended by the Rajya Sabha select committee, including appointment of the director of prosecution by the CVC.
The government, however, has not accepted a key recommendation of the panel that an official facing an inquiry by the Lokpal should not be given an opportunity to be heard at the stage of the preliminary inquiry.
The select committee, to which the controversial Bill was referred in view of sharp differences between political parties, has recommended delinking of the creation of Lokayuktas from the Lokpal Bill.
This was one of the most controversial provisions with several parties contending that it amounts to the central government encroaching upon the rights of the states.
The Bill had said state governments will have to set up Lokayuktas within one year of enactment of Lokpal.
On the issue of giving opportunity to an official to present his or her view, the government feels that such a protection is required and depriving the officials facing allegations the opportunity to present their views was against the "principle of protection".
Another recommendation made by Rajya Sabha select committee was that when a CBI officer investigating a case is sought to be transferred for any reason, prior approval of the Lokpal should be required.
The Cabinet has not favoured the proposal and has suggested an amendment saying transferring any official would remain the exclusive right of the government and the CBI chief as it was an administrative matter, sources said.
Another amendment to the select committee report approved by the Cabinet is that societies and trusts which receive government aid and not funds have been kept out of the ambit of the Lokpal.
But organisations which receive major funding from the government have been kept under the ambit of the proposed ombudsman.
The amendments will now be be put to vote in the Rajya Sabha where the measure is stuck since last year. After getting cleared from the Upper House, the legislation will travel back to Lok Sabha for fresh approval of the amendments.
The Bill has already been passed by the Lok Sabha but government's efforts to provide Lokpal with constitutional status did not succeed in the lower house.
Govt not serious on giving autonomy to the CBI: BJP
BJP on Thursday said that the government was not serious on giving autonomy to the CBI. BJP leader Ravi Shankar Prasad said that the party had recommended that CBI should be made an independent body but the government did not consider it.
Prasad also said that the process of appointment of Lokpal should be transparent and free from the government control.
Cannot trust PM, Sonia to bring stringent Lokpal Bill : Anna Hazare
Questioning the UPA government's commitment to root out corruption in the country, anti-graft activist Anna Hazare on Thursday said he does not trust Prime Minister Manmohan Singh and Congress president Sonia Gandhi for enactment of a stringent Lokpal Bill.
"Both PM and Sonia Gandhi can no more be trusted to bring a stringent Lokpal bill to root out corruption ... Had they been committed to the issue it would not have taken two years to take concrete decision in this regard," Hazare told reporters in Patna.
Describing the Lokpal Bill approved by the Union Cabinet as 'a farce', Hazare said he had written a letter to the Congress president in reply to her letter to him seeking clarification whether the proposed Bill will be a stringent one and whether CBI and the CVC will be kept out of the government's control.
But she has not responded to these clarifications, he said and trashed the proposed Lokpal Bill. "The Centre is trying to befool the people by going ahead with it."
If the government went ahead with the enactment of a 'weak' Lokpal Bill, he would launch another agitation, Hazare, who had sat on indefinite hunger strike at the Ramlila grounds in Delhi last year to press for the Jan Lokpal Bill, said.
Present Lokpal Bill will not check corruption: Kejriwal
Aam Aadmi Party convener Arvind Kejriwal has criticised the UPA government for not coming out with a "strong" Lokpal bill, saying that the proposed law would not check corruption.
"Why should you have any Lokpal? If an agency is created which will not stop corruption, will lead to increased corruption and provide protection to ministers, then what is the point," Kejriwal said.
(With inputs from PTI)