England, Northern Ireland, Scotland and Wales would join forces for a GB team.
"We have confirmed in writing that they have to provide a Great Britain team for the 2012 Olympics," said Fifa president Sepp Blatter.
"But the four British associations will not lose the rights and privileges acquired back in 1947.
"They will play with one team but it is up to them how they do it."
Blatter added: "It can be a mixed team, it can be from just one of the home nations, whatever they want to do."
The idea of a Great Britain team has met with some opposition from the Scottish Football Association and they have given a lukewarm response to Blatter's latest move.
An SFA spokesman said: "FIFA have said before that this is a matter for the British associations to decide.
"We are not currently party to any discussions on this and we have made our views entirely clear about an Olympic team.
"So the position has not changed as far as we are concerned."
should be interesting, no?