Tax on period pants will be abolished in the Autumn Statement, the BBC has been told.
On Wednesday, the chancellor is expected to announce that the underwear - which is absorbent, washable and reusable - will be "zero-rated" and no longer subject to Value Added Tax (VAT) from January.
Other period products such as pads and tampons have been exempt since 2021.
It follows a campaign by retailers, women's groups and environmentalists.
Period pants have grown in popularity as customers look for sustainable alternatives to single-use products. However, campaigners say removing VAT from the underwear would make it more affordable.
In 2021, the government removed the so-called "tampon tax" on period products including sanitary pads and menstrual cups. But period pants were classed as "garments" and therefore not covered by the change in the law.
VAT is currently paid at 20% on most products, with the exception of some items such as most food, books and children's clothing.
Retailers including Marks & Spencer and the brand Wuka were among around 50 signatories of a letter to the Treasury in August, which urged the government to remove VAT on period pants.
In the letter, they pledged to pass on any tax cut straight to customers, "so they feel the benefit of the cost saving immediately".
The letter added that period pants "have the power to reduce plastic pollution and waste", and could save people money in the long term, but added that "one of the main barriers to switching to period pants is cost".
Marks & Spencer has estimated that the cost of the VAT exemption would be 55p a year for a UK household with an average income - about the price of a pint of milk.
Former sports minister Tracey Crouch said "nobody should be taxed no matter what period product they choose".
SNP home affairs spokesperson Alison Thewliss said: "The chancellor has already accepted the logic of removing VAT on sanitary products, so it's only right that he extends that VAT cut to period pants. They are essential for many women and girls."
Over the past 20 years, period underwear has become more widespread, with major high street brands including Tesco, Sainsbury's, Primark and Next now selling it.
The pants contain a highly absorbent lining and can be used in place of sanitary pads or tampons. They can be washed and reused many times, just like ordinary pants.
The move is expected to be confirmed in Wednesday's Autumn Statement, when the government sets out its tax and spending plans for the year ahead.