Capello has faced mounting calls to resign or be sacked following his comments to an Italian broadcaster on Sunday over the Terry affair, which have been portrayed as a direct challenge to the FA.
FA chairman David Bernstein is expected to outline to Capello the reasons for removing Terry from the England captaincy, which took place last week after the Chelsea's defender's trial for racial abuse was delayed until after Euro 2012.
Capello is known to be unhappy at the FA decision, having previously stated Terry should be viewed as "innocent until proven guilty."
The England manager is also reported to have repeatedly assured Terry his position as captain was not at risk, including during a meeting at Chelsea's training ground as recently as a fortnight ago.
While some commentators have speculated that Capello could leave his £6 million-a-year position Wednesday if the talks with Bernstein break down, the wider view is that some sort of conciliatory agreement will be reached.
The Daily Telegraph reported on Wednesday that the FA is in no mood to concede any ground to Capello, who is due to leave the England post after the Euro 2012 finals.
The Telegraph said Bernstein had received backing from FA board members to challenge Capello over his comments on Terry while acknowledging that the body's options were limited.
"The complications of firing him are probably too disruptive to contemplate," The Telegraph reported, citing the "huge cost" of a dismissal as well as the disruption to the England set-up.
The Daily Mail meanwhile reported that a "furious" Bernstein would ask Capello to "show some contrition" before agreeing to issue a joint statement that would enable both sides to draw a line under the affair.
Meanwhile Capello has won support for his position from Manchester United manager Sir Alex Ferguson and Chelsea's Andre Villas-Boas.
Ferguson told CNN Capello was entitled to his opinion and suggested a breakdown in communications -- Capello had been on holiday when the Terry decision was taken -- was to blame.
"There has to be some communication regarding the issue. I know Fabio has been abroad but he's back now so the next few days should reveal everything," Ferguson said.
"It's a difficult situation for both sides. When you are the manager of a team and have a captain that is an important part of that team then you don't want to lose him, so I can understand there's a lot of discussion and controversy about it."
Villas-Boas added: "He has the right to his opinion and to share that defence with the player."
Source: AFP
Source: AFP