The 12-month extension "gives us time to assess the sustainability of reform", said a diplomat close to the talks.
A formal announcement, which would include the possibility of reviewing the decision in six months, is expected at a meeting of European Union foreign ministers on Monday in Luxembourg.
EU foreign policy chief Catherine Ashton this week pledged to ease sanctions at the end of the month in response to continued political reform in the country.
Ashton, who will travel to Myanmar April 28-30 and who has invited the country's foreign minister to Brussels, said: "We need to go further and build a partnership with Myanmar."
"I do hope that what we are now seeing is an opportunity for this country to go forward," she said. "We will now enter into an active collaboration with Myanmar, to assist the reform process and to contribute to economic, political and social development."
An easing of sanctions was expected after British Prime Minister David Cameron and the country's opposition leader Aung San Suu Kyi issued a joint call last week for the suspension of sanctions against the former pariah state.
Myanmar President Thein Sein has surprised observers with a series of reforms since taking office last year, including accepting Suu Kyi and her party back into the mainstream and freeing hundreds of political prisoners.
But Western sanctions were largely left intact as the international community balanced fears over the sustainability of the changes and a desire to bolster regime reformers who may face pressure from those wary of change.
Suu Kyi's endorsement of the suspension was also seen as crucial.