The Centre is likely to over-rule Attorney General GE Vahanvati's opinion that a constitutional amendment that requires two-thirds majority - and not a simple state reorganisation bill - would be needed to create Telangana.
Vahanvati is learnt to have given his opinion in writing and verbally to the Group of Ministers headed by Home Minister Sushil Kumar Shinde that inquired if existing constitutional provisions under Article 371 (D) would stand in the way of creating the new state.
Article 371 of the Constitution created special provisions to protect the interests of people and resources of certain regions within a state.
A section of the law ministry agrees with Vahanvati's view that a state reorganisation bill would be susceptible to legal challenge unless it was supported by an amendment to the Constitution.
But a constitutional amendment would make it near-impossible to carve out the new state, forcing the Congress to depend on the BJP - which supported creation of the new state for years - but has refused to pledge its support over the past few months.
Besides, Home Ministry officials believe that the A-G's concern was misplaced, particularly in light of precedents relating to bifurcation of Punjab and Bombay state in the sixties. More recently, the Andhra Pradesh high court had also backed this line.
Officials also point that Article 4 of the Constitution was clear that the reorganisation bill could make any consequential amendment to the Constitution necessary for creation of a new state.
On Sunday, Shinde told reporters in Mumbai that the proposed bill would come to the Cabinet "soon".
"After taking opinion from the Union Law department, it will come before the Group of Ministers (GoM) and after that only it will be kept before the Cabinet," the minister said.
Sources said the GoM also appears to be veering towards creating a special board - with chief ministers of Andhra and Telangana as members - to oversee the police in Hyderabad as part of a compromise formula on the joint capital of the two states.