According to AllthingsD, Thompson will quit his post in the wake of the controversy.
Ross Levinson, yahoo global media head, is likely to be a possible replacement for the embattled chief executive.
Yahoo is also close to compensate, Daniel Loeb, an activist shareholder who discovered Thompson's fake degree.
AllthingsD, the Wall Street Journal's technology blog, reported that Yahoo would claim Thompson is stepping down for personal reasons.
Yahoo has confirmed that Thompson does not have a computer science degree and will appoint new directors and chairman the day Thompson steps down.
In April, Yahoo announced plans to dis-engage 2,000 staff.
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