As the final decision is soon to be made by Britain's National Security Council (NSC) chaired by PM Boris Johnson and comprised of senior ministers, the body could still designate Huawei as a "high-risk vendor" in the United Kingdom and place it under further restrictions, even if the firm is allowed to build Britain's 5G infrastructure.
British civil servants have given the green-light to Huawei getting what is described as a limited or peripheral role in rolling out the 5G network in coming years according to reports, but the final decision rests in the hands of the United Kingdom national security council which will meet next week.
"The technical and policy guidance hasn't changed", said one of the sources, who spoke on condition of anonymity to discuss private conversations. And that the final outcome is "down to a political calculation".
A spokesperson for Boris Johnson said, however, that work on the matter was "ongoing".
Huawei has yet to comment on the news, but the company has repeatedly been force to deny allegations that its infrastructure could be used for illegal spying and surveillance.
Britain is caught in the centre of a geopolitical tug-of-war over Huawei, the world's biggest maker of mobile networking equipment.
The decision follows recommendations made a year ago to give the telecoms firm a limited role in the network upgrade, amid warnings that a ban would risk delaying Britain's 5G rollout and incur billions of pounds of further costs. The proposal leaked to Reuters would represent a "calculated compromise", pitched as restrictive to Washington but permissive to local carrier interests.
"The market conditions are not the same in the United States and UK", one source told The Guardian.
Britain's two largest telecoms operators, BT and Vodafone, have also argued against a total ban.
Britain's Financial Times reports civil servants met Wednesday and agreed Huawei could work on "the periphery of future 5G networks, rather than in the sensitive core".
The Chinese tech titan, who is a leading provider of 5G technology worldwide, is believed to have offered a more affordable option for its fifth-generation equipment kit than other prominent telecom companies, sources say.