By Heather Haddon.

New Jersey Gov. Chris Christie has dropped his insistence on ending seniority-based layoffs for public schoolteachers as he negotiates a compromise that would overhaul the state’s century-old tenure system, said three people familiar with the talks.

A bill with Mr. Christie’s support would include the first major changes to the nation’s oldest teacher tenure law and is set to pass the state Senate on Thursday. It would create a system in which teachers could lose tenure based on several performance measures, including student test scores, and speed schools’ ability to fire teachers.

The Assembly is expected to continue talks on its own measure on Thursday, setting the stage for a deal that could give Mr. Christie another significant victory over public-employee unions—albeit one without changes to the so-called last-in/first-out rule that requires newer teachers to be laid off before senior ones.

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