CABE is due to close at the end of March this year, following the withdrawal of an annual £5m grant from the Department for Culture, Media & Sport announced in the comprehensive spending review in October last year.
Boards from both design bodies agreed on a merger and put a proposal forward to housing minister Grant Shapps for consideration, a source told HW.
A spokesman for the Department for Business, Innovation & Skills, the Government body that sponsors the Design Council, confirmed discussions with other Government departments about CABE's future including "the possibility of the Design Council playing a role" but said no decision had been made.
Parks consultant Alan Barber said the move could throw the future of CABE Space into question. "I doubt that anyone interested in the merger will want to carry CABE Space along with them. CABE was always more interested in its design review role than any other but, to the rest of us, it just looked like architects scratching each other's backs," he said.
"Just where Shapps' interests lie in all this, I don't know. But he will be arguing the case for more house building and localism. The latter will allow developers to get their way much more easily by dealing with under-resourced community groups than they would with the planning authorities that might just challenge them on design quality," said Barber.
A CABE Space representative added: "Discussions about future arrangements for delivering CABE's functions are progressing. A further announcement will be made when these are concluded."