The phases will be clubbed after Madhya Pradesh, one of the two beneficiary states, demanded so, the sources said.
The Centre's ambitious project, which has got almost all major environmental clearances, hit a roadblock earlier this year when the Madhya Pradesh government allegedly objected to it.
The state government had allegedly warned that the first phase of the project would not be allowed to take off if it was not reworked to incorporate three other smaller projects - Lower Orr dam, Bina complex and Kotha barrage projects - in the initial phase.
"The issues raised by Madhya Pradesh have nearly been sorted out. These works will be carried out in one phase. The cost will accordingly have to be revised," the sources said.
The project may be executed based on a 90:10 funding pattern between the Centre and the states respectively, the sources said.
They added that a meeting of officials representing the Centre and the two states is expected to be held later this month to discuss and sort out the remaining issues.
They said the Madhya Pradesh government has expressed confidence it will be able to irrigate more land under the river-linking project even if the water allocation between the two states remains the same.
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