It is understood that the cross-party select committee reviewing the Armed Forces Bill will back the Government's controversial decision to maintain the ban on gays serving in the military.
The recommendation in the report, published tomorrow, is certain to provoke protest among gay activists.
They are confident the Government will be forced by the courts to follow the practice of most Nato countries and lift the ban.
Four gay ex-service people - former naval officer Duncan Lustig-Prean, ex-RAF Sergeant Graeme Grady, ex-RAF nurse Jeanette Smith and former navy weapons engineer John Beckett are to apply for leave to go to the House of Lords.
If they fail in their bid, they will go immediately to the European Commission of Human Rights. But the Ministry of Defence believes it stands a good chance of winning.
Ministers emphasise the issue of homosexuals serving in the military concerns the viability of Britain's armed forces.
The military is concerned that allowing gays to serve would affect the forces' "cohesion, morale and effectiveness".
The select committee took evidence in a lengthy public hearing on homosexuality in March from the leading gays rights group Stonewall and Rank Outsiders, the group formed to promote the interests of gay servicemen and women.Reuse content