UK Home Secretary Priti Patel has been ordered by a secretive tribunal to review the ban on the LTTE, Daily Mail reported on Sunday.
The Proscribed Organisations Appeal Commission (POAC), an independent body set up under the 2000 Terrorism Act, has ruled that the Home Secretary must consider taking the Tamil Tigers off the Government's list of outlawed bodies.
The separatist group, founded in Sri Lanka in 1976, is widely credited with devising the suicide vest.
The UK banned the Liberation Tigers of Tamil Eelam (LTTE) in 2001.
Meanwhile, the Trans-national Government of Tamil Eelam (TGTE) – the self-styled government of exiled Tamils around the world – brought a case against the Home Secretary over the ban, saying the Tamil Tigers are no longer engaged in terrorism.
However, the Joint Terrorism Analysis Centre (JTAC), which assesses the terrorist threat in the UK, said the Tamil Tigers should stay banned because they have failed to renounce violence.
The POAC ruled that Ms Patel must review the ban, saying the grounds for renewing it were flawed.
The TGTE has mounted a separate bid in the Court of Appeal to get the ban automatically lifted.