The Equitable crisis hit more than a million policy holders
Savers who lost money in the Equitable Life assurance company could be offered compensation by the government in an announcement due later.
The long-awaited Treasury statement is expected to be made at 1330GMT.
Last July the Parliamentary Ombudsman called for compensation for more than a million policyholders in the society.
Ann Abraham said maladministration was partly to blame for savings, mainly private pensions, being slashed after the society's near-collapse in 2000.
"This has to be welcome news for the society and its members," said an Equitable Life spokesman.
But Paul Braithwaite, of the Equitable Members Action Group (EMAG), doubted "full compensation", which he put at about £4.5bn, would be offered to Equitable policyholders.
"If true, this is an about-turn by the government," he added.
"The government has spent years delaying and denying and we have learned not to trust them," he said.
The Daily Telegraph claimed the Treasury would announce the establishment of an independent tribunal to decide exactly who should be compensated, and by how much.
EQUITABLE: KEY EVENTS
January 1999: Equitable asks a court for permission to abandon a guaranteed pay-out to policyholders it can no longer afford
July 2000: The House of Lords says Equitable must honour its original committments, forcing the company to put itself up for sale
December 2000: Equitable Life closes to new business after failing to find a buyer
March 2004: Lord Penrose's report says the society was the "author of its own misfortune"
July 2008: The Parliamentary Ombudsman says regulators failed to protect policyholders and calls for a compensation fund to be established
Until now, the government has argued that the failure of the Equitable, one of the the UK's biggest pension companies, was the fault of its own management.
The government's arguments relied heavily on the findings of an official report by Lord Penrose in 1994.
He decided that although regulation of the Equitable had failed, "principally, the society was the author of its own misfortunes".
It had, he found, declared its investment policies to be worth far more than was really the case, and had made promises to some savers - those with guaranteed annuity rates (GAR) - that could not be fulfilled.
That position was crystallised in 2000 when the courts told the Equitable it would have to put aside £1.5bn - money it did not have - to make good its promises to those GAR holders.
In the wake of that decision, the society's executives decided in December that year to close it to new business and put it up for sale.
Arguments about who was to blame have continued since then.
Last year, an inquiry by the Ombudsman - her second into the matter - pointed to numerous official failings over the space of a decade, which had allowed the society to exaggerate its financial health for many years.
Ann Abraham said the government should pay compensation
Ms Abraham concluded that some regulators and government departments, including the Department of Trade and Industry, the Government Actuary's Department, and the Financial Services Authority, had failed to do their jobs properly and oversee the Equitable adequately.
She said the Equitable had been in a "dire" financial position since 1990 and had been allowed to continue trading, and selling policies to new savers, long past the point when it should have been closed.
"The Equitable Life affair is a saga of maladministration that ran throughout the 1990s," said Simon Morris, of law firm Cameron McKenna.
"The regulators ignored warnings that Equitable Life wasn't being properly run, didn't carefully study the information that Equitable Life provided and didn't properly exercise their powers to protect policyholders," he added.
Even if there is a change of heart by the government, which has so far argued that taxpayers cannot be expected to provide compensation for commercial losses, it does not mean that surviving Equitable policyholders can expect money soon.
"The establishment of a tribunal to calculate compensation will just be the first step in what could prove to a complicated and lengthy process, involving hundreds of thousands of members, each with their own individual policy details," warned Tom McPhail, head of pensions research at independent financial advisor Hargreaves Lansdown.
"Disentangling regulatory failure from management incompetence will be a matter of fine judgement," he added.
Paul Braithwaite of the EMAG said that since the society closed, 32,000 policyholders had died, and more were doing so at a rate of 100 every week.
A spokesman for the Ombudsman said: "We don't really have any comment until a government response is made."