The new Wembley would be ready for 2005
Sunday's Observer newspaper says a deal has been struck between the British Government and the Football Association to revamp the existing landmark site in north London to the tune of £700m.
Tessa Jowell, the Culture, Media and Sport Secretary, is expected to confirm the decision on 17 December in an announcement to the House of Commons.
But Kevin Johnson, who is in charge of Birmingham's national football stadium bid, told BBC Radio Five Live it was pure speculation.
He said: "I have heard we are still in the race.
"There has been a lot of speculation and stories about Wembley but a lot of that has turned out to be wrong."
If Wembley does get given the go-ahead it will end years of wrangling and will allow for a new national football stadium to be built in quick time.
Financial viability
The Observer says demolition of the current stadium will begin in the spring and the new stadium will open in 2005.
It will be a slimline version of the design made public in 1999.
Wembley will be a 90,000-seater stadium and will have an eye-catching towering arch instead of the Twin Towers.
But plans for a hotel and office block have been scrapped.
The paper said the FA had rescued the project by dispelling growing doubts about Wembley's financial viability.
The £400m needed to finance it will be borrowed from Multiplex, the construction company which will build it, rather than the governing body.
Several banks, including Barclays, are said to have agreed to loans and the FA will put in £100m.
Debt repayment will bring the total cost to £700m.
The debacle over the national stadium led Birmingham and Coventry to submit their own bids to develop a site themselves.
But Patrick Carter, the businessman reviewing the competing plans for the national stadium, has backed Wembley above the other two bids.