Highly-placed sources told PTI that the internal status report is being prepared on the instructions of the new government and will be placed before the Communication and IT Minister Ravi Shankar Prasad for further action in the matter.
The sources said telecom and IT officials have been asked to prepare a detailed report on the matter.
The issue has already snowballed into a major row with opposition leaders asking government to clarify its stand on Vodafone's disclosure that India was among the 29 nations that had sought access to its network to intercept calls, text messages and e-mails last year.
Ruling BJP, which was then in the opposition, had made a big issue out of it accusing the then Congress-led UPA government of tapping phones of its political opponents.
Revealing its cooperation with state agencies, Vodafone in a 20-page report entitled "Law Enforcement Disclosure" said direct wires are connected to its network, allowing live conversations to be listened to and recorded. The wires also allow agencies to verify the location of a user.
Samajwadi Party leader Naresh Agarwal said "at least one company has accepted it. We have been talking about it for years. We raised it when (Arun) Jaitley's (then Leader of the Opposition in Rajya Sabha) phone was tapped. If the government has not given order for this, then people should know."
Raising the issue, CPI's D Raja said after Vodafone's disclosure, it is for the government of India to "set the record straight".
"It should explain its position...common people do not have access to such areas. Government will have to face the allegation made by Vodafone and set the record straight," he said.
The Indian Telegraph Act, 1885, obliges telecom service providers to "maintain extreme secrecy" in matters concerning lawful interception.