A senior administration official said on Thursday that Khalilzad will take over one of the United States' most closely watched and dangerous diplomatic posts from John Negroponte, whom Bush chose last month as the nation's first director of national intelligence.
Khalilzad's announcement is expected as early as Friday, the official said.
Bush tapped Khalilzad in September 2003 to serve as ambassador to Afghanistan to oversee elections and reconstruction efforts in the war-ravaged country.
Before that, he was one of Bush's top national security advisers and a former aide to Defence Secretary Donald Rumsfeld.
Negroponte has served as ambassador to Baghdad for less than a year, overseeing elections amid escalating violence in the wake of the 2003 US-led invasion.