The 25-member council is expected to be responsible for appointing and sacking ministers and diplomats, approving a budget and choosing up to 10 members to sketch out a draft constitution.
However, US top occupation administrator in Iraq, Paul Bremer, will have a final say over all decisions, a UN official told AFP.
“Two or three names are still under discussion, but everything is due to be settled during the course of the day,” the official said.
The body is expected to include 13 Shia, five Kurds, one Turkmen, one Christian and five Sunnis.
Eight of the council's seats would be allocated for Iraqis who returned from exile while women would take three or four seats.
The UN official added that five or six seats would go to Islamist Sunni and Shia groups.
The expected division of the council's seats has aroused the fears of the Kurdish population in northern Iraq.
Barzani: Kurds are not second
The head of the Kurdistan Democratic Party, Massoud Barzani, said in an interview with London-based al-Sharq al-Awsat newspaper that Kurds would not accept being treated as “second class citizens in a future government”.
The Kurds constitute about one fifth of Iraq's 25 million people.
He said that Kurds should enjoy “responsibility in sensitive ministries that represent the country internationally as well as in the internal security forces”.
The council will be responsible for paving the way for the first elections to be held in post-Saddam Iraq, the official said.
Besides Bremer, the British envoy to Iraq John Sawyers and UN Special Representative Sergio Vieira de Mello are epxpected to be invited to the preparatory meeting.
In the meantime, de Mello is visiting Saudi Arabia on Saturday to discuss with Saudi Crown Prince Abd Allah bin Abd al-Aziz the Iraqi situation.
De Mello’s visit is part of his “consultations with Iraq’s neighbours on current efforts to assist the Iraqi people in creating a stable, democratic and sovereign Iraq”, the UN said in a statement.
As the council is preparing to meet on Sunday, Knight Ridder news agency quoted US former senior officials as saying that Pentagon planners could not come up with appropriate plans to run Iraq, following the fall of the regime in April.
“There was no real planning for postwar Iraq,” one of the former officials said.
Civilian planners at the Pentagon’s secretive office of special plans hoped to transform Iraq into an ally of Israel, the report said.
The office’s other plans were to remove a potential threat to the oil trade in the region and encircle Iran with US friends and allies, according to the report.
The officials said that their plans to install Iraqi exile leader Ahmed Chalabi in power in Baghdad failed after it became clear that he lacked public support.