The threat to posters has emerged as a result of the scandal over Labour's secret £600,000 donations from the property developer David Abrahams.
The parties are to reopen talks on a new agreement for political funding, which will mean a big cut in election budgets.
Labour has floated the idea of an outright ban on posters.
Hazel Blears, the communities secretary, said: "At the moment, we and the Tories spend £6 million or £7 million on billboards. We all know they don't really affect the way people vote, so let's do away with them."
But David Cameron, the Tory leader, said: "Billboards are not always expensive. To start saying you can advertise on the internet and in a newspaper but not on a billboard would be ridiculous."
He added that a "tough and tight" cap on election spending would drive down poster budgets.
Although the Government will outline proposals to curb spending shortly, ministers are unlikely to propose a total ban on posters without Tory support. However, all parties are likely to cut their spending on billboards sharply to meet new spending limits.
