The IRA has changed radically and some of its most important structures have been dismantled, the body monitoring paramilitary activity is set to say.
The government hopes the report by the Independent Monitoring Commission will help its efforts to restore devolution in NI before the 24 November deadline.
It is expected to be the IMC's most positive report about IRA activities.
It will say the IRA does not want to go back to violence and no longer has the capacity to mount a sustained campaign.
The IMC's 12th report, published on Wednesday, will indicate that a number of key parts of the IRA's structure have been dismantled or substantially reduced.
It will say some IRA members remain involved in crime, but that they are not acting with the authority of the organisation's leadership.
The commission will say there is not enough evidence or intelligence information for it to say who killed Denis Donaldson, the self-confessed British spy and former head of Sinn Fein's office at Stormont, who was shot dead in County Donegal in April.
BBC home affairs correspondent Vincent Kearney said: "Turning to loyalists, the report will say that senior members of both the UDA and UVF are trying to end criminality within the organisations, but that criminal and paramilitary activity is still widespread.
"It will also say that the attempted murder of Mark Haddock, the leading loyalist who was shot six times in May, was sanctioned by the UVF leadership.
"The British and Irish governments will like what they hear about the IRA but, with local politicians due to travel to Scotland next week for talks aimed at restoring devolution, they will be keen to hear the response from the DUP."
Northern Ireland Secretary Peter Hain said it was now up to politicians to move forward.
"People need to make their minds up, has Northern Ireland changed fundamentally? The answer's yes," Mr Hain said.
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The DUP's Jeffrey Donaldson said the development was "a product of our endeavors, this is as a result of all that we've been working for".
He said "the next logical step" for Sinn Fein was to start supporting the police and "the rule of law".
On Tuesday, Prime Minister Tony Blair said he hoped the IMC report would indicate that the "conflict" in Northern Ireland is over.
The Independent Monitoring Commission was set up by the British and Irish governments in January 2004.
Most of its reports have concentrated on activity by paramilitary groups in Northern Ireland.
However, it also monitors the "normalisation" of security measures in the province.
Its four commissioners come from Northern Ireland, the Republic of Ireland, Britain and the US.
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