The visit, which is expected to take place next year, would be the culmination of an intensive campaign by ministers to become a favoured trade partner with China, which has rapidly become the world's fastest- growing economy.
It would crown a series of high-level official visits between the two countries, which began last year when the Duke of York toured China in his official role as a British trade ambassador, followed by a visit by the Chancellor, Gordon Brown, last spring.
Tony Blair is to make his second official trip there next month, chiefly because of Britain's presidency of the European Union, as part of an EU trade mission to both China and India. Plans are also being finalised for a state visit to the UK by the Chinese premier Hu Jintao next year.
A state visit by the Queen would be seen as a most significant step, and British diplomats are understood to be at an advanced stage in talks with the Chinese authorities over the visit proposal.
Britain and the EU are determined to cement close economic, military and scientific ties with Beijing. The Chinese economy is now growing at nearly 10 per cent a year. Its exports to Britain top £10bn a year - chiefly in consumer goods such as computers, home entertainment, clothing and toys.
The increasing power of China's economy was underlined last month after Britain's last indigenous major car-maker, MG Rover, was bought up by two Chinese car firms. In the same month, the first Chinese tour group visited the UK after Britain was given "authorised destination status" by the Chinese authorities.
But the EU's growing ties with Beijing has provoked a rift with the United States over plans to lift the arms embargo imposed after the Tiananmen Square massacre 16 years ago. British human rights groups are also critical of Chinese suppression of Tibet.
The trip would come 20 years after the Queen became the first British monarch to tour China, in 1986.Reuse content