Negotiations between the two coalition parties over controversial plans to extend counter-terrorism powers will continue tomorrow in an effort to reach agreement before David Cameron addresses MPs.
The Prime Minister will make a statement in the Commons tomorrow afternoon, but talks between officials from the Tory and Lib Dem sides of the Government have so far failed to finalise the package.
Defence Secretary Michael Fallon said the country faced "very real threats" but denied that the Government's plans were a "knee-jerk response".
Among the options being considered is a return of "internal exile" powers similar to those contained in the control orders scrapped by the coalition.
The independent reviewer of terrorism legislation David Anderson has recommended the return of a power to relocate suspects, which the current terrorism prevention and investigation measures (Tpims) lack, but with a greater degree of freedom than under control orders.
But such a move would be politically difficult for the Lib Dems, who strongly opposed the control order regime.
Other measures under consideration would make it easier to remove people's passports through temporary seizure powers at the border in order to prevent them travelling to the Middle East trouble zones where they could link up with Islamic State (IS) extremists.
Officials are also looking at the prospect of a "temporary bar" on British citizens suspected of terrorist activity abroad returning, a measure which would stop short of stripping them of citizenship and rendering them stateless, but f ormer Lib Dem leader Sir Menzies Campbell warned that such a move could be illegal.
Another area being examined as part of efforts to close "gaps" in the country's defences is the way that information about passengers is shared by airlines.
Some carriers do not release passenger manifests until 30 minutes before departure, giving the police and intelligence agencies little time to scrutinise the names.
Former Liberal Democrat leader Lord Ashdown hit out at the Tory response to the terror threat level being raised from "substantial" to "severe", claiming ministers including Mr Cameron had set out to frighten people in an effort to secure support for new powers.
But Mr Fallon told the Murnaghan programme on Sky News: "These are very real threats. We have had Tube trains blown up, London buses, Glasgow Airport attacked, a soldier murdered in broad daylight.
"These are very real threats we are dealing with.
"This isn't any kind of knee-jerk response. The Prime Minister made clear on Friday we need to be calm and measured about the way that we do this.
"But when we look at our current instruments, our armoury of things or how we deal with these threats, there are some gaps.
"We've had a number of young men going off to fight in Syria, a number of them slipping back home again.
"We need to make sure that, where we can, we plug those existing gaps and the Prime Minister is going to go into more details about that to Parliament tomorrow."
Several hundred British nationals are estimated to have travelled to Iraq and Syria to join the IS uprising, and other western European countries have also been a source of foreign fighters.
Mr Fallon said the risk posed by returning jihadis from across Europe underlined the need for international action.
"I think this is the point." he said. "This is now a threat to western Europe generally. This is going on on our doorstep and this does involve us, because these are fighters who can return from Syria and Iraq to western Europe.
"We are all involved in this, this is why we have to do it on a co-ordinated European level.
"We have the Nato summit in Wales taking place later this week and we have to do this collectively, it's not just for one country on its own."
He said there were "people who we know want to do this country harm, we know want to carry out attacks on members of our armed forces or on shopping centres or whatever it is" and "we need to do more to stop them".
Indicating potential changes to Tpims, Mr Fallon said the problem with control orders regime was that they ran into trouble with judges, rather than Lib Dem opposition to the measures.
He said: "The major problem with control orders has been the courts, actually, it hasn't been the Liberal Democrats, it's been the courts wanting to make sure people aren't being detained unnecessarily if they are not actually being charged.
"But we are now looking at all these things. We have to stiffen up our defences now, we have to take this threat seriously."
Labour has called for the reintroduction of control orders, and Mr Anderson directed attention to his report on their demise which said the end of the relocation power was a "voluntary political decision" rather than the result of a judge's ruling.
In an indication of the unease within the Lib Dems about measures which could restrict civil liberties, Sir Menzies said the power to prevent Britons returning to the UK could be challenged in the courts.
Th e Intelligence and Security Committee member said: "To render a citizen stateless is regarded as illegal in international law. To render them stateless temporarily, which seems to be the purpose of what's been proposed, can also, I think, be described as illegal.
"At the very least it's the kind of question which will be tested here in our own courts and perhaps also in the European Court of Human Rights."
He told BBC Radio 4's World this Weekend that " any fresh legislation would have to be subject to the scrutiny of Parliament".
Shadow home secretary Yvette Cooper called on the Government to perform a U-turn and promised Labour support to help bring back "tried and tested" control orders.
"I hope that ministers have now recognised their decision to abolish control orders and replace them with the weaker Tpims was a mistake. Theresa May has previously argued that Tpims were effective and strong enough, however the evidence has shown otherwise and it is time they reversed their decision," she said.
"Reforms need to be based on evidence, we need strong powers to protect democracy and strong safeguards to ensure they are not abused. We will look at any measures that the Government brings forward.
"But the big advantage of control orders is they have been tried and tested, and we know they can be effective, proportionate, and much stronger than current measures in place."