US Vice President Joe Biden will chair a Security Council meeting that will lift the international penalties mainly dating from Saddam's 1990 invasion of neighbouring Kuwait that set off the first Gulf War.
While international worries persist over attacks on Iraq's Christians and other minorities, and no definitive post-war agreement has been reached with Kuwait, US ambassador to the United Nations, Susan Rice, said it is time for international recognition of the "very real progress" made in Iraq.
Before the US-led invasion in 2003, Iraq was the target of the toughest sanctions regime in UN history with a near total trade and financial embargo.
One resolution to be passed on Wednesday would lift sanctions imposed in 1991 to stop Iraq building the feared nuclear, chemical and biological weapons that were never found after 2003.
A second resolution would end the oil-for-food programme which allowed Saddam to use billions of dollars of oil money to buy food and medicine between 1996 and 2003.
A third resolution would extend UN protection for six months for hundreds of millions of dollars in the Development Fund for Iraq (DFI) which was set up after the 2003 war to handle oil and other revenues.
The UN Security Council passed the original resolutions under Chapter VII of the UN Charter which was used to authorise sanctions and the international military operation to liberate Kuwait in 1991.
Wednesday's meeting will be "an important opportunity for the international community to recognise the very real progress that Iraq has made, both in terms of government formation, as well as the significant steps that have been taken to terminate its Chapter VII obligations," said Rice when she presented the Security Council programme earlier this month.
The United States holds the Security Council presidency for December. But a diplomat from another of the 14 nations on the council said all were agreed that steps had to be taken to re-establish full Iraqi sovereignty over its affairs.
Iraq informed the Security Council in July of measures it has taken to show its commitment to disarmament, including its intention to sign an International Atomic Energy Agency protocol allowing for extra international checks on its facilities.
The Security Council has called on Iraq to ratify the protocol as soon as possible, and some council members wanted this reaffirmed in the resolution to be passed Wednesday.
Iraq had wanted an extra year of UN protection for the DFI against creditors. The United States and Britain wanted the fund to come to an end on 31 December, but agreed to a six month extension because of the recent political crisis in Iraq.
There will still be sanctions against some minor members of the Saddam regime who are still on the run. Iraq is also required to pay five per cent of its oil revenues into a UN fund for reparations for Kuwait.
More than $30 billion has already been paid out by the fund, and Iraq has protested that the measure is too severe and should be lifted.
Kuwait has countered that before being released from the sanctions, Iraq needs to agree the border between the two countries, and pay a further $22 billion due in war reparations.