English football's governing body is administering the team and is set to provide all the players. The Scottish, Welsh and Northern Irish associations won't be part of the team because of fears it would jeopardize their independence and voting rights within FIFA.
FA general secretary Alex Horne wants the manager in place by June to give him time to prepare for the Olympics, which start in July 2012. Horne said it "would be very logical" for Pearce to get the job since the FA are likely to "substitute out" England under-21 friendlies in the run up to London 2012 with warmup matches for the Olympic team.
The 48-year-old Pearce, who was known as "Psycho" during his playing days when he made 78 appearances for England, has coached the under-21 side since 2007. Horne said that Pearce's "primary focus at the moment" is preparing for the under-21 European championship. At the tournament in Denmark in June, the former Manchester City manager will see many of the players who will feature at the Olympics since teams are restricted to only three players over the age of 23.
"I will talk to the board about the timing on (the appointment)," Horne told a briefing at Wembley Stadium. "I think we will make the decision in perhaps May/June time. It gives them a decent year to run the team into the tournament." Horne said the Olympic role can't combine the role with managing a club.
"We have all been there before where you overlay the pressures of the club with part-time management," Horne said. "It's why we got Stuart in permanently doing the under-21s when we did four years ago for exactly that reason.
"It becomes difficult and if we are going to take this seriously and prepare the team then I think it is difficult for a manger in employment to take that role."
Horne is still hopeful that non-English players will be part of the team. The British Olympic Association maintains that there can be no discrimination against other British players.
The Irish FA, which governs the game in Northern Ireland, has said it won't stand in the way of its players competing.
"My agenda for the next sort of three months includes serious conversations with the other home nations about the Olympic team because we need to get that right _ we are all aware there are individual player issues, there are home nation sensitivities," Horne said.
"The current arrangement is that it would be an English team representing the British Isles. The BOA have said that it is not acceptable as it stands because it is prejudicial, so we are working through an alternative selection process ... we need an appropriate selection policy and that cannot be prejudicial to individual athletes. So we need to work that through with the other home nations."
Also Tuesday, Horne said the FA is close to appointing another English coach to join Pearce on Fabio Capello's management team with the senior side.
"I would expect by the end of February to have a name," Horne said. "It's an environment where a young coach can come in and learn from Fabio, but also learn from the experiences of Stuart, John Peacock, the other national coaches that we've got. I'm speccing out a role, which is one of the reasons why it's been delayed.
"I've got a preferred candidate but I'm not going to give you a name. I envisage it will be a part-time contractual arrangement." Capello has announced he will leave the England job when his contract expires after Euro 2012.