Harry, Apache helicopter pilot, fourth in line to the British throne, started dating socialite girl Cressida around May last year.
He has been talking about getting engaged and joking it could be "any day" now, the royal source said, adding that an announcement can be expected by the end of the year and a wedding in the spring.
Harry has been "going out of his way like never before" to woo Cressida, the insider was quoted as saying by 'Daily Star'.
The couple have been together on safari in Botswana following his trip to Angola with anti-landmine charity The Halo Trust, which his mother Diana visited in 1997.
Security teams are now drawing up plans and duty rotas to prepare for the engagement, the insider said.
Cressida, 24, would then be given security cover, which would be factored in to the official rosters.
"The way it's looking now people close to Harry and Cressida predict an engagement by the end of the year and a spring wedding," the royal insider said.
"Cressida is The One. He's so close to her. All the tell-tale signs are there. People have heard Harry talking about how special Cress is and about getting engaged.
"He says 'They are all waiting for me to propose any day', then he grins. It's his idea of a joke. He takes everything like this light-heartedly. But we know his true feelings.
"He is taking a lot of time and trouble to devote so much time to her and see her as often as he can. This romance is different. She is the special one. Everyone who knows them is saying that. Unless they have some major bust-up, the engagement will be this year," the source said.
Blonde Cressida is a close friend of Harry's cousins Princesses Beatrice and Eugenie, who introduced them.
The couple split last year after embarrassing naked photos of him in a Las Vegas hotel suite emerged.
However, they patched up, and they were seen together in London clubs and bars before heading to the ski slopes of Switzerland.