Filmed auditions start in Liverpool on Wednesday but bosses are still searching for a permanent replacement for Kelly Rowland after Dannii Minogue rejected a £1m offer to return.
Producers are said to be worried that it is too late to secure an A-list star like Katy Perry and fear they could end up with Sinitta on the judging panel.
"Rod is a genuine living legend and exactly what the show needs. The details are still to be ironed out but it looks like he'll be at the auditions next month in London and possibly Glasgow because of his Scottish heritage," a source told The Mirror.
"He's sold more than 100 million records worldwide so he knows exactly what it takes to succeed in the tough world of showbusiness, and hopefully he'll also be a big draw for viewers who might not have been fans of The X Factor before.
"It's a big coup to get him involved and Simon Cowell is absolutely thrilled."
> Katy Perry, Lily Allen, Noel Gallagher: X Factor replacements in pics
Plans to hire Perry, who proved popular as a guest judge in 2010, were apparently sidelined as bosses pursued Minogue.
"Katy was a big hit with viewers when she appeared on the show, but Simon didn't act fast enough to land her for this year," the source added. "It looks like getting her now is impossible because of her other commitments.
"We have known there was an empty space to be filled for months, but it has become more and more obvious over the last 24 hours that nobody has any idea who will fill the empty slot.
"Simon had put all his eggs in one basket with Dannii Minogue, and now everyone is scratching their heads wondering who they can get. Nobody wants another boring last-minute filler like Carmen Electra, but it's almost impossible to get an A-list star with just a few days' notice."
Estelle, LeAnn Rimes and Westlife singer Kian Egan are among those being considered for the job.
Louis Walsh, Gary Barlow and Tulisa Contostavlos will return to The X Factor, as well as host Dermot O'Leary.