The Brazilian Football Confederation (CBF) are expected to make their announcement on Tuesday with Dunga ‘the front runner’ for the post.
Dunga, whose real name is Carlos Bledorn Verri, previously coached Brazil from 2006 to 2010 during which period they won the Copa America and Confederations Cup.
He also captained the country to victory at the 1994 World Cup finals in the United States.
The recently appointed general manager for Brazil's national teams, Gilmar Rinaldi, is currently considering the various options.
According to reports in Brazil, a source was quoted as saying: "He (Dunga) is the front runner in the list and things are moving forward satisfactorily.
"There were important meetings that took place in So Paulo, and Gilmar is fine-tuning details already."
Scolari left his post this week after Brazil conceded a total of 10 goals in their last two matches at the 2014 World Cup.
In his first spell as boss, Dunga led the team to 42 victories, 12 draws and six defeats.