Fracking, the process of fracturing shale rocks with drills and high-pressure hydraulics to access valuable natural gas, has caused a storm across the UK over the last few years, with many communities expressing their opposition to the potentially dangerous and environmentally unfriendly process.
It has been banned in France and Germany and faces widespread opposition within the European Union, but the Conservative government see the process as a way of securing Britain's independence from alternative energy sources.
Under current legislation, areas that could be affected by fracking are offered £100,000 for each well where exploratory digging takes place, as well as one per cent of the eventual profits accruing from use of the site, reports the Independent.
This system could lead to communities receiving between £5 million and £10 million over a 25-year period, it is estimated.
But a senior Whitehall decision-maker revealed to the newspaper that the government could be set to offer greatly increased levels of compensation as it attempts to quash opposition to the controversial project.
Although the government is expecting a swathe of objections from local councils when it applies for digging permission across the country, it hopes these groups will be swayed by the promise of a major windfall when fracking gets underway.
"We've been very careful on what we've said so far, saying that the deal we have now is a good starting point," the source claimed.
"If gas comes gushing out of the ground in Lancashire like oil did in the Shetlands, then people will start saying: 'The Government is taking a lot in tax. Why are we only getting one per cent?' We want to see this transform some communities in the way it has done in many places in the US," he added.
The Local Government Association, which represents councils in England and Wales, recently urged the government to increase compensation levels to five or ten per cent of profits.