Ansa news agency reported on Friday that the Milan stock exchange had given its backing to the proposed merger and the Italian government had welcomed the deal.
But it had still to be officially confirmed by both markets.
The merger must still be approved by shareholders of both bourses and receive the green light from competition regulators in Italy, Britain and the European Union.
LSE Group plc will be the holding company of the combined group and, in addition to its listing in London, intends to seek a listing on Borsa Italiana.
The board of the combined company would have 12 members, seven from the LSE and five from Borsa Italiana.
Chris Gibson-Smith, the current LSE chairman, will be chairman of the board of the new group, and Clara Furse, the current LSE chief executive, will be chief executive of the combined group.
Angelo Tantazzi, the current Borsa chairman, will become deputy chairman of the combined group, while Massimo Capuano will become deputy chief executive of the new group while remaining Borsa Italiana's chief executive officer.
The joint statement said the LSE board believes it will have "more than sufficient support" for the merger, which an LSE spokesman said must be approved by holders of at least 50.1 per cent of its shares.
But Citigroup bank said Thursday that the LSE group might find it hard to convince enough shareholders to accept the deal as the LSE spurned five merger offers in two and a half years, including two from Nasdaq.
Nasdaq holds 30 per cent of LSE capital. Furse had defended the strategy of staying independent, citing increased trading on the London stock market, and its success in luring foreign firms.
But she was forced to change course, especially after the recent merger between the New York Stock Exchange and Euronext, and after the friendly offer by US electronic stock market Nasdaq for Nordic exchange operator OMX.
The combined worth of companies quoted on the LSE and Borsa Italiana will be around 3.8 trillion euros, according to figures at the end of May from the Federation of European Securities Exchanges in Brussels.
The industry's globalisation has been accelerated by a move towards electronic trading platforms and away from trading floors.