The environment secretary, who threw his hat into the ring for the Tory leadership at the weekend, will make the offer to EU nationals who were living in the UK at the time of the June 2016 referendum.
The £1,330 naturalisation fee would be waived as a gesture of goodwill, Michael Gove’s aides confirmed to Sky News.
There are understood to be three million EU citizens in the UK who would be eligible, once they have been resident for five years.
The proposal to be formally unveiled next week is a victory for Conservative MP Alberto Costa who has been campaigning for the rights of EU citizens post-Brexit for many months.
The Home Office’s settled status scheme, under which EU citizens must prove they have lived in the UK for five years or they stand to lose their rights after Brexit, would also be changed to a registration scheme, under Mr Gove’s plans.
Mr Costa, who is supporting him for the leadership, told Sky News: What Michael is offering is an incentive to EU nationals who register to get British citizenship at no cost.
They would, as British citIzens, be able to vote in general elections, so it would swell the franchise by up to three million people at the next general election in 2022.
It’s the Conservative Party which initiated this whole debacle, of EU citizens being deprived of their rights. We should sort it out. In a sense, it is apologising and saying we welcome you, we want you to join the British family.
Naturalisation fees have risen dramatically in recent years, prompting criticism that they are becoming a major barrier to application.
Theresa May was never prepared to do this, she saw EU citizens as bargaining chips which has created a toxic atmosphere, Mr Costa said.
And the home secretary is not prepared to do it. Michael Gove, who led the Vote Leave campaign, takes a different approach.
This is generous, large-hearted, fee free offer. It’s the morally right thing to do and will detoxify an unpleasant situation for the Conservative Party.
Sources in Mr Gove’s team say the offer is about healing the divisions caused by the referendum.