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Sir Keir Starmer is expected to announce plans for a compulsory UK-wide digital ID scheme in a speech on Friday.
The prime minister believes it would help crack down on illegal working and modernise the state, according to senior figures in government.
The practicalities of the scheme will be subject to a consultation, which will also look at how to make it work for those without a smartphone or passport.
The previous Labour government's attempt to introduce ID cards was ultimately blocked by the Conservative-Liberal Democrat coalition.
But earlier this month, Sir Keir said in an interview he thought the debate had "moved on" since then.
"We all carry a lot more digital ID now than we did 20 years ago, and I think that psychologically, it plays a different part," he added.
Reports have suggested the government plans to use a new scheme to check people's right to live and work in the UK, with people's individual ID checked against a central database.
These checks are currently based on physical documents, although routes to complete the checks online for some people have existed since 2022.
The government last year rejected a digital ID proposal suggested by former Labour Prime Minister Sir Tony Blair.
But in recent weeks ministers have warmed to the idea, as they have come under increasing pressure to tackle illegal migration.
Cabinet Office minister Pat McFadden has also talked about the scheme's potential to improve access to government services.
He recently visited Estonia, where digital identity can be used to access services such as medical records, voting and banking.
'Cynical ploy'
Conservative leader Kemi Badenoch has expressed scepticism that digital ID would help to tackle illegal migration.
After the prime minister said earlier this month that officials were examining a scheme, she said it was "not really going to solve the problem".
Reform UK has denounced the plan as a "cynical ploy to fool voters that something is being done about illegal immigration".
"It's laughable that those already breaking immigration law will suddenly comply, or that digital IDs will have any impact on illegal work," the party added.
"All it will do is impinge further on the freedoms of law-abiding Brits."
The Liberal Democrats played a central role in blocking the previous Labour government's ID cards.
But leader Sir Ed Davey told the party's conference earlier this week the party should look at the issue again, and not be "knee-jerk" in its opposition.
Online checks
Employers already have to check that prospective candidates have the right to work in the UK.
Since 2022, they have been able to carry out checks on passport-holding British and Irish citizens by using digital verification services that have been certified by the government.
A Home Office online scheme also exists to verify the status of some non-British or Irish citizens, whose immigration status is held electronically.
It is understood officials have been looking at whether requiring a digital ID could provide a more consistent approach to verifying identity.
They are also thought to be exploring whether the scheme could reduce the use of fake documents, and make it easier to target enforcement activity.
