The United States is reportedly planning to remove the anti-Iranian Mujahedin-e Khalq Organization (MKO) from the US State Department's list of terrorist organizations.
US Secretary of State Hillary Clinton sent the US Congress a classified communication about the decision on Friday, Reuters reported.
"I am not in a position to confirm the contents of this, because it's classified, but we anticipate being able to make a public announcement about it sometime before October 1," State Department spokeswoman Victoria Nuland said later in the day.
Meanwhile, two unnamed US officials said that the decision would be officially announced early next week.
The MKO fled to Iraq in the 1980s, where it enjoyed the support of former Iraqi dictator Saddam Hussein and set up Camp Ashraf in the eastern province of Diyala, near the Iranian border.
The group also cooperated with Saddam in the massacres of Iraqi Kurds and in suppressing the 1991 uprisings in southern Iraq.
The MKO is listed as a terrorist organization by much of the international community and has committed numerous terrorist acts against Iranians and Iraqis.
Iran has repeatedly called on the Iraqi government to expel the group, but the US has been putting pressure on Baghdad to resist the calls.