"The KSK Second Command Company will dissolve," the source said, asking not to be named before an announcement Wednesday.
The KSK is the unified command for the German Army's special forces, designed in the 1990s to be the equivalent of the U.S. Special Operations Command, according to Janes, a defense analysis firm.
The unit has about 1,400 soldiers embarking on operations such as anti-terror campaigns and hostage situations, according to the AFP news agency.
German Defense Minister Annegret Kramp-Karrenbauer reportedly told the Sueddeutsche Zeitung newspaper on Tuesday that she had issued the order to partially dissolve the group, which had "become partially independent" from the chain of command, "the report said. AFP.
The minister also described the unit as having a "toxic leadership culture."
The Frankfurter Allgemeine Zeitung (FAZ) newspaper also revealed details of the plan on Tuesday.
FAZ said the group "will partially dissolve, after an accumulation of incidents and a notable accumulation of right-wing extremists in the unit," and that some 70 soldiers would be affected.
KSK members have been repeatedly linked to far-right ideologies. In May, a cache of weapons, ammunition, and explosives was seized from the home of an elite German soldier. CNN affiliate RTL reported that the man was a member of the KSK.
The German Military Counterintelligence Service had been investigating members of the special forces for a long time, and the search for the house was done after a notice from the intelligence agency, Kramp-Karrenbauer said at the time.
A working group, created in May by the minister to investigate the issue, reported its findings on Tuesday.
The report reported that the KSK "cannot continue to exist in its current form" and must be "better integrated into the Bundeswehr," according to AFP.