An approval, if given, would be the latest in a series of moves indicating a softening by the environment ministry, whose aggressive stance on enforcing rules has had several corporations worried about their investments.
Sources had told Reuters the government was likely to approve the mill in Orissa, which has been delayed by environmental issues and protests by local residents.
A government panel had earlier said there were no ecological concerns over the plant and the final decision was with Environment Minister Jairam Ramesh.
"It will be on Jan. 31," Ramesh told Reuters when asked when the decision would be taken. He did not elaborate.
Posco is among several corporations, including Vedanta Resources, which have come under scrutiny from Ramesh, putting his ministry in conflict with others in the government who are pushing for rapid industrialisation.
In October, Ramesh threw out plans by London-listed Vedanta to expand its alumina refinery over green worries, but this week Ramesh said he was willing to conditionally reconsider Vedanta's expansion plan.
That remark came soon after the ministry said it could consider approving Hindustan Construction Co's Lavasa housing project on certain conditions.