Botham, England's most famous all-rounder, played from 1977 to 1989, notching up 5200 runs and 383 wickets, and is best known for his barnstorming performances in the 1981 Ashes series against Australia.
But it is his charity walks for children with cancer which have earned him the top award, presented by Queen Elizabeth II, the Mirror said.
The star has raised some 10 million pounds (14.7 million euros, US$19.8 million) in 11 lengthy treks which have taken him around Britain and across the Alps.
"His selfless charity work is out of this world," an unnamed civil service source told the Mirror. "No-one, absolutely no-one, deserves an honour more than him."
Botham received the lower OBE (Order of the British Empire) honour from the queen in 1992.
His knighthood is set to be announced in the queen's birthday honours list on June 16, the paper reported.
Botham is still one of Britain's best-loved sportsmen, not least because of his colourful past -- he was once briefly suspended from the England team for smoking cannabis.
Since hanging up his pads, he has had a regular slot on a popular television sports quiz show, appeared in Christmas pantomimes and commentated on cricket for Sky Sports television.