A Ministry of Defence spokeswoman said the Daily Mirror report was "entirely speculative" because no final decisions have been made on which units will relieve the 19th Light Brigade currently in Iraq.
She added that the next handover is not even due until around May.
But a senior military source told the Mirror that the decision has been made to send Harry, a second lieutenant in the Blues and Royals Regiment.
"The final details are being sorted, but he is definitely going. Naturally, his royal status has to be taken into account -- but he will see action," the source was quoted as saying.
Harry, 22, has made it clear he wants to be treated no differently from other officers he trained with at the elite Sandhurst Military Academy, from which he graduated last year.
Prince Harry is the second son of Prince Charles.
'The newspaper said Harry is likely to be in charge of a troop of 12 soldiers in light armoured vehicles who will likely spend days or even weeks out in the desert conducting reconnaissance missions.
It added that Defence Secretary Des Browne is expected to announce the news on February 26.
"He has insisted on being able to perform his duties as any other officer would. He won't be just flying a desk," said a senior military source quoted by the newspaper.
"As a young officer Harry will want to go to war as a point of pride. There would have been no point in him training for this if that was never going to happen," the source said.
A total of 132 Britons have died serving in Iraq since the US-led invasion in March 2003.
Some 7,100 British soldiers are currently deployed in Iraq, mainly in and around its second city of Basra, although the government in London says it hopes to withdraw "thousands" by the end of this year.
British forces are deployed in Iraq as part of the US-led coalition and have overall security responsibility for Basra and the surrounding region, where rival Shiite militias and criminal gangs are vying for supremacy.
NWN: There is no way that any member of royalty will be put in 'harms way'. Can we just imagine if Prince Harry was killed in action in Iraq ? Blair and his masters would crap themselves.The country would fall.