The US will move its embassy to Jerusalem by May of this year in time to mark the 70th anniversary of Israel’s independence, Israeli media reported.
A US official said an official announcement is expected late on Friday, finally setting a date for Donald Trump’s controversial decision to go into force.
Under the terms of the plan, US ambassador David Friedman and a small team of staff will set up their offices in an existing American consular building in west Jerusalem.
That building will then become America’s official embassy, even if it is only temporary.
The majority of American diplomats will remain at the current embassy building in Tel Aviv.
The US government in the meantime will continue scouting for a location for the permanent embassy in Jerusalem and later begin construction on an embassy building.
Israel’s founders announced the creation of the Jewish state on May 14, 1948 and the embassy is expected to be open in time for the anniversary.
Because Israeli Independence Day, known in Hebrew as Yom Ha’atzmaut, is marked by the Jewish calendar Israelis will actually celebrate on April 18.
Palestinians traditionally mark Nakba Day on May 15, the day when they commemorate the mass displacement of Palestinians during the 1948 Arab-Israeli War.
Saeb Erekat, the chief Palestinian negotiator, said the Palestinian leadership condemned the decision "in the strongest terms". He said the decision to coincide the embassy opening with Nakba Day would "provoke the feelings of all Arabs and Muslims".
The embassy plan can move forward after Rex Tillerson, the US secretary of state, signed off a security plan on Thursday.
Mr Trump officially recognised Jerusalem as Israel’s capital in December, despite fury from the Palestinians and warnings from Western allies.
The announcement was met with widespread condemnation in the Islamic world but relatively muted protests in Gaza and the occupied West Bank.
The Palestinian Authority, the Palestinians semi-government in the West Bank, has said the decision disqualified the US as a honest broker for peace talks.
The Palestinians have said they will refuse to take part in any US-brokered negotiations and have appealed to Russia and the EU to to host the talks instead.
The White House has insisted it will remain the lead mediator for talks and will press ahead with releasing a peace plan later this year despite the Palestinian refusals to negotiate.