Ministers are expected to publish plans to enable same-sex couples to "marry" in church.
Equalities Minister Lynne Featherstone is to propose lifting the ban on civil partnerships taking place in religious settings in England and Wales.
There are no plans to compel religious organisations to hold ceremonies and the Church of England has said it would not allow its churches to be used.
Gay rights campaigner Peter Tatchell said the change was "long overdue".
Civil partnerships ceremonies are currently entirely secular.
It is not clear whether the proposals will suggest that civil ceremonies in religious surroundings could incorporate elements such as hymns or Bible readings or be formally be described as marriages.
It is thought this might be part of a consultation process.
Equality Act
Marriage between people of the same gender is not legal in the UK but civil partnerships were introduced in 2005 to give couples the same legal protection as if they were wed.
The proposals were welcomed by gay rights campaigners but may raise the ire of many churchgoers.
Mr Tatchell said: "Permitting faith organisations to make their own decision on whether to conduct same-sex civil partnerships is the democratic and decent thing to do.
"The current law prevents them from doing so, even if they want to. No religious institution will be forced to perform civil partnerships if they do not wish to do so."
The Archbishop of York, Dr John Sentamu, gave the news a guarded welcome.
He told the BBC's Andrew Marr Show he "believes in a liberal democracy, and actually wants equality with everybody" but did not want churches to be told what to do.
"You mustn't have rights that trump other rights," he added.
The Sunday Telegraph claims the decision to push ahead with the legislation is a victory for Mrs Featherstone and her fellow Liberal Democrats.
The newspaper says the Church of England has already said it will not allow any of its churches to be used for civil partnership ceremonies.
The legislation would also cover synagogues and mosques although homosexuality is forbidden under Islam.
The Roman Catholic Church has long held that homosexuality is a "deviation" and is not expected to agree to same-sex ceremonies.
But Quakers, Unitarians, and Liberal Jews are thought to be more sympathetic to the idea, says the newspaper.
In February last year several senior Anglican clergymen wrote to The Times calling for the law to be changed.
The group of clerics, which includes the Bishop of Salisbury, the Dean of Southwark and five former bishops, said: "Straight couples have the choice between civil marriage and religious marriage. Gay couples are denied a similar choice."
The move follows an amendment to the Equality Act by Lord Alli, a Labour peer.
That amendment, which would not force religious venues to accept gay couples, has not yet been implemented and would require a standing order.
The BBC understands Mrs Featherstone has been consulting with gay and lesbian groups and churches about this issue and is expected to make an announcement within the next few weeks.
According to reports, the government plans would also see straight couples being allowed to become civil partners.
On Friday, the Protection of Freedoms Bill included plans to lift a ban on night-time weddings and also gave gay men the right to clear their name by removing out-of-date convictions for consensual acts.
A Home Office spokesman said: "The government is currently considering what the next stage should be for civil partnerships, including how some religious organisations can allow same-sex couples to register their relationship in a religious setting if they wish to do so.
"Ministers have met a range of people and organisations to hear their views on this issue. An announcement will be made in due course."
The Office Of National Statistics reported in May 2010 that 26,000 same-sex couples had undergone civil partnerships.
Topic: England gives churches the "gay-ahead" (Read 2723 times)