The Times newspaper said interior minister Priti Patel would announce the move in Washington and present it to parliament next week.
Israeli Prime Minister Naftali Bennett welcomed reports of the decision. In a Twitter post he said “Hamas is a terrorist organization, simply put. The ‘political arm’ enables its military activity. The same terrorists – only in suits.”
Hamas is an offshoot of the Muslim Brotherhood. Founded in 1987, it is opposed to the existence of Israel, and opposes peace talks, instead advocating “armed resistance” against Israel’s occupation of the Palestinian territories.
Reporting by Stephen Farrell; Additional reporting by Nidal al-Mughrabi in Gaza; Editing by Toby Chopra