The law creating the tribunal, which could be passed as early as Sunday, will be similar to proposals made in Washington in April, according to one member of the US appointed Iraqi Governing Council.
The law calls for Iraqi judges to hear cases presented by Iraqi lawyers, with international experts serving only as advisers.
That would mark a stark difference from UN-sponsored tribunals set up to consider war crimes in the former Yugoslavia and in Rwanda.
In those courts, international judges and lawyers have argued and decided cases.
Some human rights groups criticised the plans, saying Iraq's US occupiers have too much of a hand in them and that Iraqi judges and prosecutors may not have the experience needed to try the cases.
Two members of the Governing Council, Mahmud Uthman and Samir Shakir Mahmud, said that the tribunal would be created in the coming days, as did an official of the US-led occupation authority, who spoke on Friday on condition of anonymity.
Thousands of relatives of people who went missing under Saddam Hussein's regime have filed complaints against members of the former regime.
One group in Baghdad, the Iraqi Human Rights Society, took 7000 complaints before the paperwork overwhelmed its staff.
The Governing Council has been discussing the war crimes tribunal law for months, and it is not expected to encounter major opposition within the governing body.
Mass graves found in Iraq could
be used as evidence in the trial
The US occupation authority, which has veto power over Governing Council decisions, must also sign off on the plan, but it remained unclear when the trials would begin.
The occupation authority currently holds at least 5500 people in prison, but it is unclear how many of those are war crimes suspects.
Prosecutors will use a growing cache of documents seized from the former regime as evidence.
The occupation coalition now has an estimated nine miles of paperwork, and Iraqi human rights groups and political parties have even more. Evidence will also come from the excavation of mass graves that dot the Iraqi landscape.