Thai firm SSI, owners of the Redcar steelworks, is to go into liquidation.
Sources told the Press Association that the board had applied to wind up the Teesside business, with a formal announcement being made later today.
The move followed a Government has announcement of an £80 million package to support workers who have lost their jobs at the huge steel plant.
Around 1,700 jobs are being axed after SSI announced earlier this week it was mothballing iron and steelmaking.
The money includes funding for workers to train at local further education colleges and to help them start up their own business.
Business Secretary Sajid Javid, who attended a meeting of a local taskforce in Redcar today, said: "This is an extremely difficult time for the workforce at SSI and the local community. The package we are announcing today will provide important support to workers and the local economy. Across government we will continue to focus on providing assistance where we can."
The Government also confirmed that the company made a "last minute and unrealistic" request for the taxpayer to make an "open-ended" funding commitment to maintain the coke ovens in Redcar.
A statement by the Business Department said: "The Government cannot accept the request. On the basis of the limited business case it was given, the Government has no confidence that this is a realistic proposal for taxpayers to support.
"In addition, it would be illegal and in breach of state aid rules. The company has never made a profit and the board's proposal would do nothing to address the huge debts outstanding to local suppliers and other parties."
A spokesman for the Community union said: "We have been saying for weeks that SSI is not fit for purpose. It is clear that SSI has yet again put forward a plan to government that lacks credibility.
"We believe there are alternative plans and parties who could intervene to protect the industrial assets. Government's responsibility has not ended with the announcement of this support package.
"It should intervene to remove SSI and support an alternative approach that gives steel-making an improved chance of a future."
The Government had warned that liquidation of SSI in the UK was now a "risk" after the company entered "rehabilitation" under Thai law.
A steel summit will be held on October 16, involving steel companies, MPs, unions and governments to discuss the future of the industry.
Gareth Stace, director of trade body UK Steel, said: "This is a welcome announcement to support the local community in its hour of need. Government has put this marker down as a sign of intent and it is an important first step in ensuring vital skills are not lost and livelihoods are supported.
"It is for Government to decide whether there was a case for using taxpayers' money and if this wasn't made for business reasons then we have to accept that.
"However, the much bigger issue is the future of the steel industry in the UK which make no mistake is in crisis. The forthcoming summit now assumes ever greater importance and it is critical that the Business Secretary spearheads a campaign to secure a sustainable future for the sector
"The Government is able to ensure steel companies operate on a level playing field and it must use this opportunity to support the steel sector as I fear time is of the essence."
A GMB official said the union was seeking to establish what the move will mean for the future of the workers affected.
Roy Rickhuss, general secretary of Community, said: "This is of course yet further devastating news for the workforce, their families and the community. We will be taking steps to ensure our members' interests are represented through this process and putting claims forward for what they are owed.
"My union, Community, will establish our own taskforce of organisers, legal and education and training officers to support our members, their families and the entire community on Teesside at this extremely difficult time."
It is understood that PricewaterhouseCoopers are to be appointed as liquidators, sources told the Press Association.
Gareth Stace, director of trade group UK Steel, said: "It may be too late for SSI but the situation in Redcar brings the problems facing the UK steel sector into sharp relief.
"The Government must now spearhead efforts to support the steel industry and the supply chains it feeds.
"The steel site in Redcar remains a viable and efficient plant and the Government-led steel summit taking place in two weeks will be a make-or-break event for the entire industry."
Steve Readman, site convenor for the GMB union, said: "The recent announcement of an £80 million support package is welcomed. We will be involved in working through the detail of how this funding can be accessed and how quickly and who by.
"In light of the announcement that SSI-UK is now in liquidation we need to understand if the package includes redundancy payment services.
"This is an extremely worrying time for our members and their families and the wider community and we will be doing all we can to support them.
"We will want the Government and the liquidator to involve all interested parties who may wish to acquire the site and speak to them to save as much of the site as possible."