The comedian will launch a new primetime Friday night chatshow on ITV1 next year, putting him head-to-head with BBC One's Jonathan Ross, The Mirror claims.
A source said: "This will give Paul the best of both worlds - less work but a big show on a mainstream channel in a primetime slot.
"ITV want him to be their answer to Wossy and plan to expand on his current daytime show by pulling in bigger names, including A-list celebs. Paul has a great way of relaxing his interviewees so he's sure to get great guests onto the show."
O'Grady recently announced that his daily Channel 4 show was "likely to go at the end of the year" because he disapproved of planned budget cuts.
The 54-year-old originally launched his teatime programme on ITV1 in 2004. He then defected to Channel 4 in early 2006 and went on to publicly criticise his former employers on a number of occasions.