A decision to extend the life of the Garona plant in northern Spain would be a U-turn for Socialist Prime Minister Jose Luis Rodriguez Zapatero who had vowed to gradually phase out nuclear power.
The plant's operating permit expires on Sunday but the president of Spanish utilities association UNESA told radio Cadena Ser that the government would allow it to operate "until 2013". It had been designed to function only until 2011.
Carlos Bravo, head of Greenpeace Spain's nuclear campaign, also said the government had decided to extend the life of the plant, one of Spain's six nuclear power plants, until 2013.
"The green credentials which the head of the government enjoyed have ended," he said.
Industry Minister Miguel Sebastian is scheduled to announce the government's decision on the plant at 6:00pm (1600 GMT).
Earlier, Zapatero told public radio RNE "the solution will be reasonable, reasoned, balanced and responsible" but would likely be criticised by both sides of the debate over the use of nuclear power.
Only one other nuclear plant in Europe that is older than Garona which is located in England and it is set to close in 2011, he added.
"It is an old plant, designed with decades-old technology, and we have to very much bear that in mind when thinking of our country's future," he said without elaborating.
Spain's six nuclear power plants produce around 20 percent of the country's electricity.
Garona is run by Nuclenor, which is jointly owned by Spain's two biggest utilities, Iberdrola and Endesa.