Many Korean women were forced into sexual slavery by the Japanese military during World War II. Some historians put the number as high as 200,000. Korea was under Japan's brutal colonization from 1910-45.

In late 2015, the then-Park Geun-hye administration signed the agreement to resolve the history issue. They launched the foundation, intended to help the victims and their families, the following year. Japan offered to contribute 1 billion yen ($8.9million) to it.

 Critics here, however, disapproved of the deal, saying it was unilaterally signed by the government without reflecting views of the victims.

President Moon Jae-in, a former human rights lawyer, also believes the agreement should not have been inked, while Tokyo urges Seoul to abide by the agreement.

"To my knowledge, a related ministry is considering making public the decision this week to dismantle the Reconciliation and Healing Foundation," the senior government official said, referring to the Ministry of Gender Equality and Family.

Another official said the South Korean government plans to announce the decision as early as Wednesday.

The government will then talk with the Japanese authorities on how to handle the seed fund, the official added.

It's estimated to take six months to a year to complete the legal procedures for the shutdown of the organization.

In a meeting with Prime Minister Shinzo Abe in New York in September, Moon said the foundation is not functioning normally and hinted at disbanding it.

If the decision is made public, it would deal another heavy blow to the already-troubled Seoul-Tokyo ties, following a Seoul court ruling last month in favor of four forced labor victims during Japan's colonial rule.

The Supreme Court acknowledged the individual victims' rights to compensation from a Japanese steelmaker in spite of a 1965 state-to-state treaty to settle legal problems connected to the colonization and normalize bilateral diplomatic ties. (Yonhap)