Five has been granted a licence for a second channel, the UK television regulator Ofcom has confirmed.
Five is said to be among those hoping to secure a slot on Freeview
The network is planning to launch its first satellite and cable venture, general entertainment channel Five.2.
According to industry paper Broadcast, Five has secured funding from parent firm RTL for its expansion which will include children's programming.
Five is also reportedly bidding for a slot for its new channel on the free-to-watch digital service Freeview.
Five's main channel is already available to Freeview viewers.
The major networks have been expanding their digital offerings in recent months.
ITV has launched a new male-targeted channel ITV4 and is planning a new children's channel, while Channel 4 has started entertainment-based More4.
Last month Sky Three, which features programmes already seen on Sky One as well as original travel and lifestyle shows, replaced Sky Travel on Freeview.