The son of News Corporation's chairman and chief executive officer Rupert Murdoch has been heavily criticised for his handling of the ongoing phone hacking scandal which started at the News of the World.
Sources told Sky News that James is expected to resign from his position at a board meeting later today.
Sky News City editor Mark Kleinman said that James had decided that his resignation was "in the best interests" of the company.
He will reportedly continue in a non-executive role at the company.
Having previously been chief executive of BSkyB from 2003 to 2007, he was appointed chairman in December 2007.
It is believed that current deputy chairman Nicholas Ferguson may replace James as chairman though details have not yet been confirmed.
It recently emerged that James would not seek re-election to the board of auction house Sotheby's.
He had previously quit as executive chairman of News International newspapers in the UK in February.
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