The Labour Party has been put on standby that Tony Blair may announce he is stepping down as the Member of Parliament for Sedgefield.
Mr Blair has been Sedgefield MP for 24 years
Officials said Mr Blair is expected to attend a meeting of his local party hours after quitting as prime minister.
He is thought likely to quit if he is confirmed as a Middle East envoy on Wednesday by the Mid-East quartet of the US, Russia, the UN and the EU.
Mr Blair has been MP for Sedgefield, in north-east England, since 1983.
Downing Street refused to comment on Mr Blair's plans, but a local source in his Sedgefield constituency said: "If he gets a job on the worldwide stage, I think there will be a by-election."
There is also expected to be a by-election in Ealing Southall, prompted by the death of local MP Piara Khabra last week.
It is likely both by-elections would be held on the same day.
Meanwhile, representatives from the quartet have been meeting in Jerusalem to discuss the post of envoy.
US President Bush supports Mr Blair in the role, but diplomatic sources told the BBC that frosty relations between Russia and Britain were behind a delay in any announcement.
However, senior UN officials describe Mr Blair as a star player who will bring energy to the Middle East peace process.
Speaking on his last full day as British prime minister, Mr Blair said: "I think that anybody who cares about greater peace and stability in the world knows that a lasting and enduring resolution of the Israeli-Palestinian issue is essential.
"And I will do whatever I can to help such a resolution come about."
Chancellor Gordon Brown will take over as British prime minister on Wednesday afternoon.