At a meeting yesterday, the Congress president Sonia Gandhi reportedly said the region of Telangana - one of three that makes up Andhra Pradesh - should be turned into a state.
The party knows there will be a backlash within and outside the Congress, but the decision could be politically advantageous ahead of the national election. 15 Congress ministers from the state wrote to Ms Gandhi today threatening to resign over the bifurcation of the state. (Watch)
The ministers who protested today said the government has "underestimated" the feelings of people from other regions in Andhra Pradesh and asked how a national party can jump to such a decision for short-term electoral gains.
The government's decision may be announced before Parliament meets for the monsoon session on August 5.
In anticipation of a decision to bifurcate the state, three state legislators from the Congress have resigned because they say they want Andhra Pradesh to "remain united."
They have been followed by another 16 from the YSR Congress, which is headed by Jagan Mohan Reddy.
The five-decade struggle for a Telangana state was forced onto the national agenda in 2009 by the Telangana Rashtra Samithi or TRS, headed by K Chandrasekhara Rao. He fasted for 10 days, triggering huge rallies of support.
In response, in December 2009, in a surprise announcement, the Centre said it was sanctioning statehood. But within days, the government backtracked as violent protests erupted in the other two regions - Coastal Andhra Pradesh and Rayalaseema
At the heart of the tug-of-war is Hyderabad, and its robust IT-driven economy. Telangana wants to claim Hyderabad as its state capital. Leaders of the other two regions say they cannot afford to lose the employment and investment opportunities invested in the city. As a compromise, the Centre is reportedly in favour of making Hyderabad a shared capital between the new and old state for the next five or 10 years.
Andhra Pradesh has 42 Lok Sabha seats. The Centre reportedly wants to move two districts from Rayalaseema to Telangana. This will divide the seats equally between the new state and the old, and also check the growing popularity of Jagan Mohan Reddy and the YSR Congress. Mr Reddy's stronghold lies in Rayalaseema. By carving it up, the Congress hopes to divide his supporters.