Christian Wulff will step down in a television address later Friday, DPA said, citing sources, a day after prosecutors demanded his immunity be lifted to investigate allegations he abused his position.
Merkel's hand-picked choice for Germany's head of state has been battered by almost daily allegations in the media that he accepted favours when he was premier of the state of Lower Saxony.
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Wulff, 52, was due to make the statement from the sumptuous Bellevue Palace in Berlin at 1000 GMT, his office said.
Merkel cancelled a planned trip to Rome to meet Italian premier Mario Monti on the euro crisis to make her own statement 30 minutes later.
Late Thursday, the prosecutor in the northern city of Hanover also announced an "initial suspicion" against Wulff's film producer friend David Groenewold, who reportedly picked up the bills for Wulff's hotel and an upgrade during two short breaks.
Wulff's lawyers have said he repaid the money in cash for one of the stays.
"I assume that the parliamentary commission for immunity and the Bundestag (lower house of parliament) ... will vote in favour of the request by the Hanover prosecutor," deputy head of the Christian Democratic Union's (CDU) parliamentary group Michael Meister told Deutschlandfunk radio.
The conservative CDU is the party of both Wulff and Chancellor Angela Merkel.
Wulff's role is largely ceremonial but carries important moral weight and the announcement by the prosecutor in Hanover, the capital of Lower Saxony, marks the first time Germany's parliament has been asked to consider lifting the president's immunity.
