The Home Secretary, Jack Straw, is expected to announce next week that a senior judge will head the new investigation of the case.
In a separate announcement to be made today, Mr Straw will introduce new, longer prison sentences for people found guilty of racially motivated crimes of violence.
Mr Lawrence's family has been campaigning for a new examination of the police investigation into his murder in April, 1993. They have also criticised the handling of the case by the Crown Prosecution Service.
The A-level student was standing at a bus stop in Eltham, south London, when a gang shouted racial abuse at him and then attacked him. An inquest jury ruled in February this year that he was unlawfully killed.
Mr Lawrence's parents, Neville and Doreen, met Mr Straw a month ago. After the meeting at the Home Office - the first with the family since he took office - the Home Secretary said there was a "strong case" for the judicial inquiry they had requested.
Mrs Lawrence said after the meeting that the family had lost confidence in the police and the legal system. "What we want to find out is the truth of what went on that night. The only way we're going to find out is through a judicial inquiry. A police inquiry is not enough," she said.
The Crown Prosecution Service had previously dropped charges against two of the five youths who have been named in connection with the crime. A private prosecution brought by Mr Lawrence's parents collapsed after the evidence of a key witness was ruled inadmissable. The family is considering a second private prosec- ution against two of the youths. They may also take out a civil action for damages against all five.
After the inquest ruling, the Daily Mail named the five young men as Mr Lawrence's killers, challenging them to sue for libel if the paper was wrong.
In March, the Lawrence family made an official complaint over the way police investigated the murder, claiming they did not take it seriously. Earlier this month, the Prime Minister pledged to hunt down the killers, saying there was a "deep sense of injustice" that they had not been brought to book.
Mr Straw will say in a speech to the black Jewish community today that that the Government plans to increase prison sentences for racially motivated violent crimes. A consultation is expected soon on the new sentences. They will be included in the Crime and Disorder Bill, to be published in the autumn. The Bill will include a new offence of racial harassment and racially motivated violence.
Mr Straw will make clear that he expects the courts to pass higher sentences in cases where there is a racial element to crimes.Reuse content