Reports of the move, which could be officially made public next week, come amid contrasting claims that British ministers believe the threat of war has receded since Christmas.
"
We cannot rule out the possibility of a further statement next week
"
Ministry of Defence
US President George W Bush has meanwhile issued a rallying call to his troops, telling them that a war in Iraq would be "not to conquer but to liberate".
He urged Iraqi leader Saddam Hussein to "end his defiance" of United Nations resolutions and avoid US-led military action.
The Daily Telegraph newspaper says the UK is preparing to send 20,000 regular troops and 7,000 reservists, including a Royal Navy force, to the Gulf.
Further statement
A spokesman for the Ministry of Defence said: "We have been making preparations to have credible options available if necessary and we are likely to do more.
"We cannot rule out the possibility of a further statement next week."
It is thought any announcement would be made to the House of Commons on Tuesday, when MPs return from their seasonal break.
UK Prime Minister Tony Blair returned from a 10-day family holiday to Egypt on Saturday.
Downing Street said he would be working at Number 10 over the weekend.
The US already has about 60,000 troops stationed in the Gulf with more on the way.
It was confirmed on Friday that units of the 45,000-strong US 1st Marine Expeditionary Force are being ordered to the region.
At the same time Mr Bush was telling cheering soldiers based at Fort Hood in Texas - the largest US Army base - that the world had already spoken with one voice on Iraq.
But, he went on, Saddam had "chosen the path of defiance" and was a threat to America and its friends
"Should Saddam seal his fate by refusing to disarm, by ignoring the opinion of the world, you will be fighting not to conquer anybody but to liberate people," Mr Bush said.
He also took the opportunity to say America was winning its war on terror around the world.
Saddam disarmed
Meanwhile, Downing Street has refused to comment on reports in UK newspapers that ministers believe a war on Iraq can be avoided, and that the odds are now 60-40 against action, compared to 60-40 in favour before Christmas.
The Times newspaper said that cabinet sources believed war could be avoided if Saddam Hussein disarmed or stood down under pressure from other Arab leaders.
Mr Blair - who has held talks with Middle East leaders during his trip to Egypt - and Foreign Secretary Jack Straw are determined to keep open the prospect of a diplomatic solution to the crisis, it is claimed.
And they are keen to play down suggestions that a progress report from the UN's chief weapons inspector, Hans Blix, due on 27 January, will provide a trigger for war.
Credible threat
A Downing Street spokesman said: "War is not inevitable.
"We want a peaceful solution, but Iraq will not comply without a credible threat of military action. Ultimately the choice is Saddam's."
Meanwhile, Turkey's foreign minister has said his government supported US pressure on Iraq, but warned that the Turkish people opposed American forces being based in their country.
If Washington was allowed to deploy large numbers of troops in Turkey it could attack Iraq from the south and north.