The debate is being closely watched internationally after Sweden incurred Israel's wrath this month for saying it will recognise Palestine.
While the vote, initiated by backbencher Grahame Morris of the main opposition Labour party, is purely symbolic and will not change government policy, it is thought to be the first substantial House of Commons debate on the issue since 2012.
Labour's leadership has said that MPs who are in the Commons when the vote takes place must back it, although a number of high-profile figures are reportedly uncomfortable with the motion and will not show up to avoid an awkward situation.
Among the two parties which make up Britain's coalition government, a small number of Conservatives and many Liberal Democrats - whose party supports Palestinian statehood - are likely to vote in favour.
"If the vote is a success, it would put a tremendous amount of pressure on the current government and the next government, which is likely to be a Labour government, to recognise Palestine as a state," Morris told AFP in an email. "The UK recognising Palestine could give decisive momentum to more EU states following suit."
Members of the government are set to abstain, Prime Minister David Cameron's official spokesperson said.
"We think that... you should do everything you can that's supportive of a successful and sustainable outcome based on a two-state solution," the spokesperson told reporters at a regular briefing.
"The government's position is very clear and hasn't changed, so I think that is a very clear indication of the British government's approach."
An online petition which initiated the application for the debate has gained more than 111,000 signatures of support, Morris said.
The debate follows the collapse of peace talks between Israel and Palestine and this year's conflict in Gaza in which more than 2,000 Palestinians and dozens of Israelis were killed.
Beforehand, a handful of protesters gathered in pouring rain outside the Houses of Parliament, where they had erected a giant banner saying: "Yes Vote For a Palestinian State".
"If there is a state, the aggression would stop and the healing could begin," said one of them, Eddie Clarke. "We feel this parliament has a duty to vote for it."
The Palestinian Authority estimates 134 countries have recognised Palestine as a state although the number is disputed and several recognitions by what are now European Union member states date back to the Soviet era.
Newly elected Swedish Prime Minister Stefan Loefven this month announced his intention to recognise a Palestinian state.
Sayeeda Warsi, a former British minister who stepped down in August saying the government had failed to condemn Israeli military action in Gaza severely enough, called on MPs to lead by example.
"There is a lack of political will and our moral compass is missing," the former Foreign Office minister told the Sunday newspaper The Observer.
"Somehow we have to breathe new life into these negotiations, and one of the ways we can do that is by recognising the state of Palestine."
Morris said recognition would be "a clear and legitimate message that Britain and others recognise Palestinian rights and that the illegal settlement enterprise has no validity".
And Britain's former international development minister Alan Duncan, a Conservative MP who is due to travel with Warsi to Gaza later this month, said London had a "historic and moral duty" to recognise the state of Palestine.
Britain abstained in 2012 from a vote in the United Nations on giving the Palestinians the rank of observer state, which was granted despite opposition from the United States and Israel.
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