Tymoshenko will replace Moscow-leaning Viktor Yanukovich, following a year-long political battle that ended with snap elections in September.
The Financial Times said a Tymoshenko-led government is expected to push Ukraine closer to joining NATO and to shake up relations with Russia, which could affect gas supplies to much of the European Union.
Tymoshenko, a major figure in Ukraine's Orange Revolution, has pledged to fight corruption and raise living standards. She is seen as a possible rival to President Viktor Yuschenko in the 2009 presidential election. A similar rivalry led to her ouster as prime minister in 2005, and the Times said "influential oligarchs" already are working to undermine her government.