The 26-year-old was frozen out by the ECB following an incident outside a Bristol nightclub in September which left a man with facial injuries.
Stokes missed out on England's trip to Australia for The Ashes as a result and remains unavailable pending the conclusion of a police investigation into the fracas.
According to The Times, however, the ECB will issue Stokes with a No Objection Certificate allowing him to participate in the IPL, which gets underway in April.
Last year Stokes became the most expensive overseas player ever in the competition, securing a deal worth £1.7m with Rising Pune Supergiant.
"We could say no but having given him an NOC to play in New Zealand, it would be difficult to say that on balance we would not apply the same thinking to [him] playing in other parts of the world," ECB chief executive Tom Harrison told the newspaper.
"There's nothing in the rules that says he can't [play for England] but there's a reputational element to take into account. The reputation of the game is paramount and [the board] will be at pains to make sure that's at the heart of any decision."
Recent reports have suggested that the police investigation into the Stokes incident could last for another six to 12 months.