It is expected that Fifa will announce this week that players lining out for the North can hold either an Irish or British passport, once the Belfast-based Irish Football Association (IFA) can vouch for their eligibility.

The resolution will be a major climbdown for Fifa, which had previously ruled out Northern players exclusively holding an Irish passport from lining out for Northern Ireland. Fifa had said rules on dual nationality did not apply to players when they were on the pitch. This clarification from Fifa prompted IFA to warn its footballers they faced being disqualified from competition if they refused to comply.

The government reacted angrily to Fifa's original decision, arguing that it ran contrary to the Good Friday Agreement, which entitles citizens of Northern Ireland to hold either a British or an Irish passport. It was also criticised by former Northern Ireland footballer Neil Lennon, who said it would have barred him from playing international football.

FIFA's stance prompted a flurry of behind-the-scenes diplomatic activity. Last month, foreign affairs minister Dermot Ahern instructed Ireland's ambassador to Switzerland, Joe Lynch, to set up a meeting in Zurich with Fifa, involving the body's legal director, Heinz Tennler, to sort it out.

Ahern said at the time that it was "clear that the person who drafted the Fifa letter is not very familiar with the situation in the North".

The minister also said his department had spent the previous six weeks seeking a legal opinion from Fifa but the association had been "incapable" of coming up with one. He added that he suspected that "they simply don't have a legal opinion and are frantically searching around for some form of words to justify what they have done".

Fifa was also told by the government that producing a British passport did not in itself display eligibility to play for Northern Ireland, as British passports were also held by citizens of England, Wales and Scotland. The government proposed the IFA design a process of authenticating individual players to be provided to the match commissioner at each game. It is expected Fifa will agree to a form of this proposal.