Lippi's decision to stand down as coach of the national team after the tournament has been an open secret for some time but as to who should replace him has been subject to fierce speculation.
Manchester City boss Roberto Mancini and Chelsea coach Carlo Ancelotti were both linked to the role but it now seems that the 52-year-old former Roma and Parma manager has been selected.
Italian sports daily La Gazzetta dello Sport report that Prandelli has been contacted by Italian Football Federation (FIGC) president Giancarlo Abete twice and that an agreement was finally reached on Wednesday evening, although both parties have refused to comment thus far.
Lippi led the Azzurri to World Cup glory in Germany four years ago when they beat France on penalties in the final, only to stand down after that tournament to be replaced by Roberto Donadoni. Donadoni had a largely unsuccessful two-year spell in charge of Italy and his sacking saw the re-appointment of Lippi.
The former Juventus and Inter manager will now hope to end his current Azzurri tenure the same way he did four years ago, before he reportedly returns to club management -with AC Milan his likeliest destination.
Despite a disappointing 11th place finish in the Serie A this season, Prandelli is Fiorentina's longest serving manager and has largely been credited with returning the glory days to the Tuscan club, losing out narrowly to Bayern Munich in the last 16 of this season's Champions League.
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