A special Cabinet committee led by Prime Minister John Major has agreed to abolish the poll tax, Britain's deeply unpopular system for raising local government revenues, and is likely to replace it with a modified form of property tax, sources in the ruling Conservative Party confirmed Friday.

The poll tax, known officially as the "community charge," is, in effect, a head tax that each resident is required to pay regardless of income. It replaced a property-tax system in which only homeowners and business owners paid to local jurisdictions.The sources said the decision to scrap the tax, which set off riots in central London and helped bring about the downfall of former Prime Minister Margaret Thatcher, was taken at a closed-door session of the committee Thursday.

While the move is not expected to be approved by the full Cabinet until next week, it marks the death knell for the tax and the most dramatic break yet between Major and his predecessor, who championed the tax as a cornerstone of her government's policy.

Major told the special committee he had concluded that the tax was administratively unworkable and politically disastrous and could not be salvaged, the sources said.

In abolishing the tax, the government faces the problem of coming up with an alternative that will be less burdensome to local taxpayers and politically palatable to Thatcher loyalists. Press reports said the Cabinet was leaning toward a "household tax" that would be based on a combination of the property value of a home and the number of adults living there.