The justice ministry drafted the amendment so as to give Japanese nationality to children born to foreign mothers without consideration to their parents' marital status, the Japanese business daily Nikkei reported, without citing sources.
The plan comes after the Supreme Court last month ruled it was unconstitutional to deny nationality to illegitimate children who were mostly born to Filipina entertainers working in Japan.
The bill for the planned amendment was likely to be submitted to the next parliament session starting in late August or in September, the report said.
According to official statistics, approximately 2,800 children born out of wedlock to foreign mothers reside in Japan, more than 2,000 of whom have Japanese fathers.
Japan, which largely regards itself as ethnically homogeneous, bases nationality on blood ties. It has rejected the idea of large-scale immigration even though it has one of the world's lowest birthrates.
In Japan, nationality was traditionally passed down through the paternal line, with a child obtaining Japanese citizenship only if his or her father was Japanese.
Japan changed the law effective from 1985 to permit either a mother or father to pass on their nationality, but imposed the condition that the father must recognise paternity while the child was still in the womb.
The Tokyo High Court had last year refused to grant the plaintiffs Japanese nationality, saying that illegitimate passport seekers could abuse the law if fathers gave nationality to children already born out of wedlock.