The US has decided to remove the Iranian dissident group Mujahadin-e Khalq (MEK) from its list of terrorist organisations.
US officials confirmed on Friday that Hillary Clinton, secretary of state, had sent a classified opinion to congress, and that it was expected to be formally announced in coming days.
"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," Victoria Nuland, state department spokesperson, said.
The US decision comes after years of intense lobbying by the MEK, which had seen many of its members stranded in Iraq even as the group fell out of Baghdad's favour after the fall of Saddam Hussein.
The MEK had surrendered weapons to US forces after the 2003 invasion of Iraq.
The group was listed as a foreign terrorist organisation by the US in 1997. But the MEK has insisted that it has renounced violence and has lobbied fiercely in Washington to gain congressional support for its delisting.
The MEK, also known as the People's Mujahideen Organisation of Iran (PMOI), led a guerrilla campaign against the US-backed Shah of Iran during the 1970s, and also opposed Iran's religious leaders who replaced the shah.
It was given refuge in Iraq by Saddam.
The US had repeatedly said its decision on the MEK's terrorist designation hinged partly on the group's remaining members leaving Camp Ashraf, an Iraqi base where they had lived for decades, and moving to a former US military base in Baghdad from which they were expected to be resettled overseas.
The US added the MEK to its list of foreign terrorist organisations in 1997. But the group has since said it renounced violence and mounted a vigorous legal and public-relations campaign to have the designation dropped.
Public figures who have endorsed the MEK's campaign included R James Woolsey and Porter Goss, former CIA directors; Tom Ridge, former homeland security secretary; Louis Freeh, former FBI director; and Mitchell Reiss, a former state department official who is a senior foreign-policy adviser to Republican presidential candidate Mitt Romney.
Representative Dana Rohrbacher, a California Republican who is one of the group's strongest supporters on Capitol Hill, said Clinton's decision would send a signal to Iran's religious leadership.
"The MEK are Iranians who desire a secular, peaceful, and democratic government. Nothing threatens the Mullah dictatorship more than openness and transparency," he said in a statement.