Economic woes mean Taipei must free up investment
The change is likely to be announced at a cabinet meeting on Wednesday, according to Taiwan press reports.
Taiwan's president, Chen Shui-bian, will unveil a new stance of "aggressive opening and pragmatic controls" towards China.
The new, vigorous approach ditches the 5-year -old policy of "no haste, be patient" introduced by President Chen's predecessor during tensions with the mainland in 1996.
'Within days'
President Chen Shui-bian said on 4 November that he was intending to announce a major policy shift within a couple of days.
He was speaking at an election rally for the 1 December vote for the legislative assembly.
A cross-party presidential advisory committee suggested easing investment policy towards the mainland in the summer, since when Taiwan's recession has got grimmer.
The committee also urged the cabinet to consider restoring direct transport, commercial and postal links with the mainland for the first time since 1949.
Investment cap to go?
The measures likely to be unveiled this week include easing restrictions on investment and on doing business with mainland banks, according to reports in Taiwan newspapers.
An investment cap setting a limit of $50m per investment is likely to be abolished.
Offshore banking units of domestic banks could be allowed carry out direct dealings with mainland financial institutions.
This would reduce the complexity of arrangments for routing funds to China through another territory, which is usually Hong Kong.
From boom to bust?
The investment limits were imposed in 1996 by then-president Lee Teng-hui to try to ensure investment went into building up Taiwan's own economic base.
The ongoing global slowdown has hit Taiwan hard, with unemployment hitting record highs and hi-tech exports slumping.
China and Taiwan are both expected to be welcomed into the World Trade Organisation at its Ministerial summit in Doha, Qatar within a few days.
China's entry into the WTO will bring wide-ranging market access agreements with all the WTO's 142 other members.