The diplomat, who did not want to be indentified, said the decision could be announced at a EU-Russia summit in Nice on Friday, which could also address the possible deployment of Russian Iskander missiles near the Polish border in response to the U.S.' missile shield plans for Central Europe.
The 27-nation bloc said on Monday that talks on a partnership agreement, last delayed in September over Russia's August conflict with Georgia, would resume later this month, despite opposition from Lithuania.
The diplomat said the EU does not link the Caucasus conflict with the development of its relations with Russia.
Russia and Georgia fought a five-day war after Georgia attacked breakaway South Ossetia on August 8. Moscow recognized South Ossetia and another Georgian breakaway region, Abkhazia, as independent states in late August. The EU called of the second round of talks on the cooperation pact on September 1, two weeks before the sides had been due to meet.
"The European Union takes a realistic position on the Georgia-South Ossetia conflict," the diplomat said. "We insist on Georgia's territorial integrity, but territorial disputes like the divided Cyprus exist inside the EU. This does not mean existing problems must stall decision-making and further work."
But he said Russian troops' withdrawal from the upper Kodori Gorge and Akhalgori could be discussed at the summit. Russia, which has withdrawn troops from undisputed parts of Georgia, has ignored Tbilisi's demands for the pullout from the areas, saying they are the parts of Abkhazia and South Ossetia that had been occupied by Georgian troops.
Speaking about President Dmitry Medvedev's recent statement on stationing missiles in Russia's western exclave on the Baltic Sea, the diplomat said: "The possible deployment of Iskander missiles in Kaliningrad is not on the agenda of the Russia-EU summit, but it may still be raised."
Moscow has been fiercely opposed to Washington's plans to place 10 interceptor missiles in Poland and a radar in the Czech Republic, dismissing its explanations that the bases are necessary to counter possible strikes from "rogue" states like Iran.
European leaders criticized Medvedev's announcement as damaging relations with Europe and harming its security.
The diplomat said the official summit agenda includes Russia-EU relations, serious discussions on the current credit crisis and a looming economic recession, and a new European security system proposed by Medvedev.
He said European countries are not unanimous on Medvedev's proposal and need "more details of Russia's vision of the new security system."
Russia and the EU had started consultations on a new security agreement, in which Medvedev wants to involve the EU, as well as the U.S., Canada, NATO, the post-Soviet Commonwealth of Independent States (CIS) and its Collective Security Treaty Organization, before the war with Georgia.
At talks on the sidelines of the summit, the leaders will also discuss Iran's disputed nuclear ambitions, the situation in Afghanistan, Georgia and possibly in the Balkans, the diplomatic source said.
