Official sources said such a body that could become the second of its kind after Independence, could go into the entire issue in-depth and give its recommendations.
The move, the sources believe, could take the heat off the sensitive issue in Andhra Pradesh that has now erupted into a huge problem in Telangana region.
During the last fortnight, there were protests in the Rayalseema and Coastal Andhra regions against the December 9 announcement of Union Home Minister P Chidambaram that steps should be initiated for creation of a separate Telangana state.
On Wednesday night, the government appeared to have put the issue on the backburner when Chidambaram said the situation in the state has altered since the December 9 statement and that there was need for wide-ranging consultations with all political parties and groups in the state.
The sources said a new SRC would also go into demands for separate states from areas like Gorkhaland (West Bengal), Bundelkhand, Harit Pradesh (both Uttar Pradesh) and from North East that got a fresh lease of life after Chidambaram's December 9 announcement.
Sources said by setting up the SRC, the government would like to buy time on the issue since it has a tendency to become a law and order issue when groups can exploit emotions.
If such an authority is set up, the process may be time consuming as pleas and counter pleas of various groups, which either oppose or favour a separate state, should be heard by being given a reasonable opportunity.
Besides, the members of the SRC would visit each of the region whose demands would be taken up for consideration.
If the political leadership takes a decision in favour of constituting the SRC, the issue would go to the Union Cabinet, which has to approve it.
A retired Supreme Court or High Court judge could head the Commission which could also have some members.