Congress is expected to approve the creation of the new state of Telangana on Tuesday amid fears the decision will spark violence in the region which includes IT hub Hyderabad.
Prime Minister Manmohan Singh, Congress party president Sonia Gandhi and other senior leaders were set to hold talks later on Tuesday over longstanding demands for the state of Telangana to be carved out of Andhra Pradesh state.
"The Telangana issue will be discussed today (Tuesday). We have to bring all our political allies on board before we can take any decision on this matter," a senior source in the Congress party in New Delhi told AFP.
Newspapers and television channels widely forecast that the state would be approved.
The issue, the source of frequent clashes between protesters and police since 2009, has led security forces to be put on alert in Hyderabad, which is home to tech firms including Facebook and Google.
The proposed new state, which would be the 29th in India, would be created out of an impoverished, drought-prone area inhabited mostly by tribal groups which supporters say has been neglected by the Andhra Pradesh government.
In 2009, the then-home minister P Chidambaram promised Telangana supporters that the government would finally bow to their decades-long campaign after a hunger strike by a regional leader and violent protests by students.
Andhra Pradesh, formed in 1956, is India's fifth largest state in terms of territory and sends 42 MPs to India's 543-member parliament. The Congress party won 33 out of these in 2009 national elections.
Experts say the division of the region, with Hyderabad set to serve as joint capital, is a gamble by Congress as it tries to boost its electoral returns from a crucial state in national polls next year.
They also say it creates the risk of spurring demands for statehood elsewhere in India, particularly in a tea-growing area of West Bengal where ethnic Nepalis have long campaigned for a state called Gorkhaland.
The Indian Express newspaper said the creation of Telangana would take time and "it is likely to come into existence only around May next year".