American officials blame high-profile attacks in Afghanistan on the powerful Haqqani network, which mainly operates out of Pakistan's border areas, and say it has ties to the Pakistani state.
Senior Pakistani government officials told Reuters a formal announcement of the ban would be made "within weeks".
"We have decided to ban the Haqqani network as a step in implementing the National Action Plan devised after the (Peshawar) school attack," said a cabinet member, referring to a massacre of 134 children by Taliban gunmen last month.
"The military and the government are on the same page on how to tackle militancy. There is no more 'good' or 'bad' Taliban.
"Kerry specifically pressed for action against the Haqqanis, including banning the group," the official added.
A second official, a minister who spoke on condition of anonymity, confirmed the decision to outlaw the Haqqani group.
The United States accuses the Pakistani intelligence agency of supporting the Haqqani militants and using them as a proxy in Afghanistan to gain leverage there against the growing influence of its arch-rival India. Pakistan denies this.
A formal announcement of the ban would show the government is keen to convince the United States it will no longer differentiate between 'good' and 'bad' militants.
But it remains to be seen if the ban will translate into significant action.