The ban against having a drag on work time will apply to all 45,000 employees of the city of Stockholm, according to Sveriges Television.
The formal decision has not yet been taken but is expected to gain a majority when a vote is held in the autumn, with the governing centre-right coalition in favour of the smoking ban.
Smokers will from next May only be able to enjoy a cigarette on their unpaid lunch hour.
Gothenburg county council is also reported to be mulling a similar ban.
A new report published this week by the Swedish Public Health Institute (Statens Folkhälsoinstitut) indicated that smokers are costing Swedish municipalities 2.6 billion kronor ($367 million) per annum in the form of breaks and sickness absences.
Work time lost to smoke breaks totalled 31,300 kronor per smoker per annum, the institute calculated.
Furthermore smokers typically claim an additional eight sick days in comparison with a non-smoker and this costs an additional 13,700 kronor per smoker per annum.
The Swedish Association of Local Authorities and Regions (SKL) supports the introduction of smoking bans. A survey conducted by SKL earlier in 2009 showed that 64 of Sweden’s 290 local municipalities had decided to introduce work time smoking bans.