Blair's official spokesman said the prime minister would set out his intentions to Cabinet colleagues on Thursday morning. He is then expected to travel to his Sedgefield constituency in northern England to make a public announcement.
Speculation about Blair's resignation date intensified after he celebrated a decade in power on May 1.
In British parliamentary tradition, the leader of the largest party in the House of Commons serves as prime minister. Blair's announcement that he is stepping down as Labour leader will trigger a leadership contest that would see him replaced as party leader, and prime minister, within about seven weeks.
Treasury chief Gordon Brown, Blair's longtime friend and rival, is the favorite to succeed him, although two backbench Labour lawmakers also have announced their intention to run.
Blair's announcement has been awaited since Sept. 30, 2004, when he said in a television interview that he would serve only one more term — his third — as prime minister.
The announcement, made when he was facing a surgical procedure to correct a heart problem, was one he came to regret, as opponents, party rivals and the media pressed him to set a date for his departure.
In September, Blair told delegates at Labour's annual conference that it would be his last as party leader.
Dogged by the unpopular war in Iraq and weakened within his own party, the once-unassailable Blair came to be seen as a lame duck.
Conservative leader David Cameron accused Blair on Wednesday of being "a prime minister who ... simply doesn't understand that it's over."
Prime ministers recently have tended to stay on in the House of Commons for a time.
John Major, Blair's predecessor, kept his seat for four years, and Margaret Thatcher served out the remaining 18 months of her parliamentary term after resigning as prime minister in 1990.
Ted Heath, Conservative prime minister in 1970-74, continued in the Commons for 26 years.