The former Juventus boss has agreed in principle to take over as head coach of the national team but wants significant levels of control over the youth and senior set-ups
Antonio Conte will be named as the new head coach of Italy - provided his demands are met.
Conte resigned as Juventus coach earlier this summer after guiding the club to three consecutive Serie A titles since taking charge in 2011.
Carlo Tavecchio, the new president of the Italian Football Federation (FIGC) confirmed earlier on Tuesday that he has spoken with Conte over the position with the national team, which has been vacant since Cesare Prandelli stepped down following the World Cup.
Despite initially having reservations over the position, Goal understands the former midfielder would be interested in taking up the role as long as certain conditions on the part of the FIGC are met.
Conte is believed to be content with the financial package on offer but is keen to take a hands-on technical control of the national team set-up - including the youth sides.
Although the FIGC consider the demands to be somewhat excessive, there is a growing sense of optimism that an agreement can be reached before August 18, when they hope to make an announcement over the next Italy boss.
Tavecchio in particular is keen to press ahead with a deal with Conte as he looks to restore his image - among supporters and the media as well as governing bodies Fifa and Uefa - following the racism scandal which threatened to derail his bid to become new FIGC president.
Should a deal with Conte prove impossible, Italy are expected to turn to Francesco Guidolin, who stepped down as Udinese head coach this year to take on a technical supervisor role. World Cup-winning former defender Fabio Cannavaro and Alberto Zaccheroni, who recently left his post with Japan, are not in the running.