The terrorist group has been persecuting tens of thousands of Christians as it advances over large parts of Iraq and Syria.
It's thought the troops will be deployed within weeks, following a pledge from the Defence Secretary Michael Fallon last month to offer further training to Iraqi soldiers and Kurdish Peshmerga forces.
Although it's understood they will not have a combat role and the UK government has repeatedly insisted any deployment would not mean 'troops on the ground'.
A team of military advisors recently went to Iraq to look at options for a larger deployment of British forces.
Sources say the soldiers will be mainly split between the capital Baghdad and Irbil in the north.
British aircraft are already bombing Islamic State sites.
Islamic State has murdered thousands of people who do not sign up to its strict version of Islamic Law which involves keeping slaves and persecuting non-believers.
In some towns Christians have been ordered to pay an extra tax or face death. Last month reports said four Christian children were beheaded for refusing to pledge allegiance to the Prophet Muhammad.
In a statement to Sky News a Ministry of Defence spokesman said: "The Defence Secretary announced the intention to provide further training to the Iraqi military in early November.
"No decisions on troop numbers, units or locations have been made, so this is purely speculation at this stage."
It comes after the most senior US Commander Lt Gen James Terry said a coalition training mission in Iraq would involve around 1,500 soldiers.