The Queen has agreed the honour for the brother of former US president John F Kennedy for services to the US-UK relationship and to Northern Ireland. Gordon Brown is to formally announce the award during his address to both houses of Congress on Wednesday.
The prime minister's speech comes on the second full day of his visit to which featured brief talks with President Obama on Tuesday.
Mr Kennedy, who has been a senator for his home state of Massachusetts for more than 46 years, is being treated for a brain tumour.
The most senior living member of the famous Irish-American political dynasty, he was diagnosed with brain cancer in May last year after being rushed to hospital with stroke-like symptoms.
Seizure
He has since had chemotherapy and radiation to treat the malignant glioma, an aggressive type of brain tumour.
Mr Kennedy suffered another seizure during President Barack Obama's inaugural lunch in January, but was released from hospital a day later.
The father-of-five was elected to the US Senate as a Democrat in 1962 following the election of his brother as president.
Apart from his famous family connections, he is probably best known in the UK for his work on the Northern Ireland peace process.
Steven Spielberg is another American with an honorary knighthood He has been intricately involved with province's politics, meeting Sinn Fein leader Gerry Adams and other politicians during and beyond the Good Friday agreement.
He famously snubbed Adams during the latter's St Patrick's Day trip to the US in 2005 following the brutal killing of Robert McCartney.
The IRA, closely allied to Sinn Fein, was accused of involvement in his murder.
Mr Kennedy joins a select band of overseas nationals given an honorary knighthood.
Microsoft billionaire Bill Gates, former president George Bush senior, former mayor of New York Rudolph Giuliani and the film director Steven Spielberg have also received the honour.