Mercedes and other engine manufacturers look set to reluctantly accept the proposed rules for 2021.
Earlier, it was believed both Mercedes and Ferrari were threatening to quit if the current ’power unit’ regulations are changed too much.
But the FIA and Liberty Media are determined to simplify the rules, primarily by scrapping the MGU-H energy recovery system.
"We have made concessions on a number of points and agreed to abandon the MGU-H," Mercedes boss Toto Wolff said in Monaco.
"We believe that in terms of technology, it’s a backwards step. But for the sake of increasing the entertainment, we went for a certain compromise.
"The maximum number of revolutions will increase, the restrictions on fuel consumption will be cancelled and, in my opinion, the sound of the engines will become louder," he added.
"It’s not the most correct approach from the point of view of the environment, but we can understand it. We are all close to reaching an agreement," said Wolff.
A June deadline has been set for the publication of the 2021 rules.
Wolff joked that he almost had to contact an "anger management" specialist to deal with some of the recent meetings, but said compromise was eventually needed for the good of F1.