The 50-year-old has been out of contract since June 30. Since replacing Jürgen Klinsmann as coach after the 2006 World Cup, he has taken Germany to the Euro 2008 final and this year's World Cup semi-final. Both times his side was beaten by Spain.
Although initial talks broke down earlier this year over financial disagreements and also Löw's desire to have more control over the Under-21 side, German Football Federation (DFB) president Theo Zwanziger is expected to rubberstamp the new agreement on July 30 at an executive committee meeting, according to Bild.
The new contract will see Löw - who has the best overall record for a German manager of 38 wins in 55 matches - take charge till Euro 2012.
"A four-year contract was never a topic, that was also Joachim Löw's philosophy," Zwanziger told Bild. "Long-term commitments aren't so good, also because of economic reasons. It's reasonable to think from tournament to tournament."
Löw is still to hold talks with his backroom staff and general manager Oliver Bierhoff to see if they are satisfied with the offer on their return to Germany following the third place match against Uruguay in Port Elizabeth on Saturday.
Löw's confirmation in the post will come as a huge blow to DFB technical director Matthias Sammer, who was being touted as a possible alternative to Löw and also vehemently opposed the German coach having more responsibility for the Under-21 side.
Sammer, who guided the Under-21 side to European glory last year with a side including Mesut Özil, Manuel Neuer and Sami Khedira, does not enjoy good relations with Bierhoff and has stayed away from South Africa during the finals.