State Attorney Edna Arbel is said to have concluded there are sufficient grounds to charge Mr Sharon.
The prime minister – who has denied any wrongdoing – is being investigated for possible bribery.
An Israeli developer is alleged to have paid hundreds of thousands of dollars to Mr Sharon’s son Gilad. The developer, David Appel, employed him as a consultant in a deal involving a Greek resort, although Gilad Sharon had no previous experience in the tourism industry.
The final decision whether to press charges against the prime minister rests with Attorney General Meni Mazuz. The TV report said prosecutors regarded the evidence in the “Greek island affair” as open to different interpretations.
But Ms Arbel felt that on balance an indictment should be presented, the report added.
Mr Sharon has said he intends to serve the rest of his term until 2007, despite the allegations against him.
But analysts say that if charges are brought, he will almost certainly have to quit.