If confirmed by the Senate, Yellen would be the first woman to lead the US central bank in its 100-year history. Fed Chairman Ben Bernanke is poised to step down in January 2014, Xinhua reported.
Yellen became the front-runner for the top job after former Treasury Secretary Lawrence Summers withdrew last month from the race.
The nomination has been delayed by the ongoing fiscal wrangle and government shutdown, sources said.
In August, Obama said he had considered a range of highly qualified candidates to replace Bernanke, including Summers, Yellen and former Fed Vice Chairman Donald Kohn.
Choosing the Fed chair, probably the most powerful economic figure in the US, will be one of the most important decisions for Obama in his second term.
Born in 1946, Yellen was former president and chief executive officer of the Federal Reserve Bank of San Francisco. She also served as chair of the White House Council of Economic Advisers under former President Bill Clinton.