According to The Guardian, Coulson has been told by police that he will be arrested on Friday morning on suspicion of having knowledge or direct involvement of the hacking of mobile phones while editor of the newspaper.
The news comes soon after it was announced that News of the World will cease production on Sunday following the allegations.
The Guardian has also reported that another former senior journalist at News of the World will be arrested, but has decided not to name them in order to "avoid prejudicing the ongoing police investigation".
Police are said to have been forced to make the arrests following leaks from News International.
Coulson will reportedly be formally questioned on Friday on his involvement with the alleged hackings, in a process that will take several hours. He will most likely be released on bail on condition that he appears in court at a later date, according to the newspaper.
The journalist resigned as David Cameron's director of communications in January. He was editor of News of the World between 2003 and 2007.
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