The announcement is expected to be made within weeks, The Daily Telegraph reported, and follows UK officials building the case against the IRGC and security services sharing intelligence.
When the group has been proscribed as a terrorist organisation it will become a criminal offence to belong to the IRGC, attend its meetings, carry its logo in public or encourage support of its activities.
Ken McCallum, the MI5 Director General, gave a rare public speech last November on Iran and its threat to the UK, which included detailing past plots.
“Iran projects threat to the UK directly, through its aggressive intelligence services,” Mr McCallum said.
“At its sharpest, this includes ambitions to kidnap or even kill British or UK-based individuals perceived as enemies of the regime.
“We have seen at least 10 such potential threats since January alone.”
Iran's nuclear programme - in pictures
Mr Tugendhat is regarded as a driver of the designation and said last month that Iran had continued plotting against British targets despite Mr McCallum’s speech.
A Farsi-language TV station based in the UK claimed last November that an Iranian hit squad in London aimed to murder two of its British-Iranian journalists.
The channel accused the IRGC of aiming to attack its journalists, who were not identified. Scotland Yard declined to comment at the time.
The IRGC was formed after Iran’s 1979 revolution as an ideological custodian of the country’s new religious values.
The organisation has since grown to be a major military, political and economic force in the country.
The move caused Hassan Rouhani, who was Iranian president at the time, to accuse Mr Trump of being a “leader of world terrorism”.
Canada also banned more than 10,000 IRCG officers and senior members from entering the country last October and followed with the promise of more sanctions.
It also classified the group under the Immigration and Refugee Protection Act, which Canada usually implements for those accused of the most serious war crimes.
Iran displays drones at secret underground base - in pictures
In Britain, public displays in support of the IRGC have become more common, but they would become illegal if the group were proscribed.
In May 2021, an IRGC flag was unfurled during an anti-Israel demonstration in Trafalgar Square. One Iranian news agency repeatedly ran footage showing the flag.
The event prompted calls for action to be taken against the Corps, including from Mr Tugendhat, who at the time was on the backbench and chairman of the Commons foreign affairs committee.
“This would be a very welcome move. It is a step that a number of our key allies have already taken,” Mr Crabb said.
“The Islamic Revolutionary Guard Corps is playing a key role supporting and facilitating the Iranian regime’s destabilising activities in the Middle East and beyond.
“It is very, very clear that the international community needs to take much stronger and clear-sighted action against Iran.”
Canada declares Iran's IRGC a ‘terrorist organisation’ - video
“Proscribing the IRGC would demonstrate to Iran that it can’t be business as usual,” said Lord Eric Pickles, the parliamentary Lords chairman of the Conservative Friends of Israel.
Suggestions that the IRGC is a terrorist group has always been played down by Iranian politicians and officials, who have repeatedly defended its actions as a legitimate extension of the state.
Under the Terrorism Act 2000, the home secretary has the right to proscribe an organisation if it is reasonably believed that the body is involved in terrorism and it is proportionate to do so.
So far, 78 terrorist organisations have been proscribed under law.
“While the government keeps the list of proscribed organisations under review, we do not comment on whether a specific organisation is or is not being considered for proscription,” a government spokesman said.