for an Independence referendum at a key meeting tonight, The Royal Gazette has learned.

Cabinet is recommending a Commission of Inquiry on Independence, followed by a referendum.

The plan has caused party veteran Mrs. Ann Cartwright DeCouto to resign as Delegated Affairs Minister, while former UBP Senator Mr. Wendell Hollis has cited Independence among his reasons for quitting the party caucus.

"This much is clear,'' said Mr. John Barritt MP, who as caucus chairman and Government Whip will chair tonight's meeting at Chancery Hall, "there is a difference of opinion, not just over Independence, but whether or not Bermuda's interests will be served by taking the route that is proposed.'' Party sources said terms of reference of a Commission of Inquiry, timing of the referendum, the size of a referendum majority that would be required to seek Independence, and who would be eligible to vote were among areas likely to be canvassed.

Premier the Hon. Sir John Swan has backed off an Independence referendum in the face of caucus opposition before.

This time, "I think he feels stronger than ever that he's got enough friends in caucus that he may not have to back off,'' one caucus source said.

But another source predicted the Premier and Cabinet would retreat if they felt they could not carry the needed votes with their slim majority in the House of Assembly.

"I think it will be fairly fiery,'' the source said. "I think there would be a hard core of members who would probably say, `Whoa, stop, let's rethink this'.'' A report that the vote could be held as early as August was especially vexing to some caucus members, who see a December referendum as the earliest possible.

Also, the Commission's terms of reference could be broadened to look at a special arrangement with the United Kingdom as an alternative to Independence.

The caucus could debate whether a mere 50 percent or a two-thirds majority in favour would be required to launch a Constitutional change. And it could also decide whether Commonwealth residents who arrived in Bermuda prior to 1976 and can vote in general elections would be able to vote in the referendum. It is understood one suggestion is that only born Bermudians be allowed to vote. Of the elected members, only Mr. David Dodwell MP and Mr. Richard Spurling MP are expected to be off the Island tonight.

Longtime Independence opponent the Hon. C.V. (Jim) Woolridge, who missed last week's caucus, would still not be drawn on the issue last night, except to say: "Nothing has changed to alter my position.'' Mr. Barritt said the question of an Independence referendum must be separated from "personal agendas'' on both sides of the issue.

In Bermuda "a majority of people still believe that unless a convincing case can be made for Independence, that we should remain with the status quo,'' said Mr. Barritt.

That was fair, but it might not be wise "to shut the door completely on the question as to whether Bermuda's interests can best be served by remaining a dependent territory or becoming Independent,'' he said.

With bases closing and new world trading blocks emerging, "I don't think it is unreasonable for us to have to take stock of what Bermuda's position is going to be,'' Mr. Barritt said.

And debate about whether now was the appropriate time to discuss Independence was irrelevant. "It's almost water under the bridge now,'' he said. "It's here. It's been made an issue ... and it needs to be addressed.'' Meanwhile, Mrs. Cartwright DeCouto stepped up her attack on Government's plan.

A Commission of Inquiry and referendum on Independence would cause "inestimable'' damage to Bermuda's economy, she said.

Saying her resignation marked her "political rebirth'', not her obituary, Mrs. Cartwright DeCouto said she could see no advantages in the path being followed.

"It's like bungee jumping,'' she said. "The only reason to do it is if you like the risk.'' A Commission of Inquiry on Independence would cause such "disruption and divisiveness,'' that capital would flee Bermuda and projects would be put on hold, she said.

Existing companies might not leave, but "I suspect that many companies that have seriously been considering Bermuda as a jurisdiction to relocate will put their plans on hold or ... go to other jurisdictions''.

Also, "we have had an intense general election campaign and the word Independence has not passed anybody's lips,'' she said. "To have this come spinning out of left field is quite wrong, with no public demand.''