Kosovans are anxiously awaiting the publication of high-level proposals that will reportedly set the Serbian province on the road to statehood.
Ethnic Albanians have expressed nervousness ahead of the report
The United Nations special envoy, Martti Ahtisaari, will reveal his plans in Belgrade and Kosovo on Friday.
Diplomats say the proposals do not mention "independence", but in effect clear the way for it, Reuters reports.
Serbia has so far refused to consider any proposal that would allow the province to break away.
Kosovo has been under international protection since Nato forces expelled Belgrade's troops from the province in 1999, to prevent atrocities against its ethnic Albanian population.
Talks to determine Kosovo's final status have been continuing for years without the two sides coming to agreement.
Ethnic Albanians, who make up 90% of the province's two million people, overwhelmingly want to break away from Serbia.
But Serbs regard the province - which is still officially part of Serbian territory - as the cradle of their culture, and oppose any solution that would lead to its independence.
Mr Ahtisaari's plan, however, opens the way for Kosovo to press towards that goal, according to diplomats cited by Reuters news agency.
It avoids any reference to Serbian sovereignty or to Kosovan independence, but would allow Kosovo its own "national" symbols, including a flag and anthem, and to apply for membership of international organisations like the UN, the sources said.
This could lead to a declaration of independence by Kosovo, and its recognition by individual states, Reuters said.
'Will die here'
Slobodan Samardzic, a member of Serbia's negotiating team, has already rejected Mr Ahtisaari's expected conclusions.
"Anything that... violates Serbia's internal laws, cannot be a subject to negotiation," he told state-run Serbian TV.
The UN Security Council will have the final say on Mr Ahtisaari's plan.
Kosovo Albanians expressed nervousness on Thursday ahead of the formal announcement.
Saime Maliqi, 47, who lives in Kosovo's capital Pristina, said: "All of us are waiting desperately for Friday to improve our lives."
Hasan Bytyqi, an ethnic Albanian merchant, told Associated Press: "To be honest, I am a bit scared of what we are coming to."
Aleksandar Spasic, a 76-year-old Kosovan Serb, said: "I don't believe that Ahtisaari will help Kosovo Serbs a lot. But I will never leave Kosovo... I was born here and this is where I want to die."