David Ginsberg, a spokesman for Edwards, would not confirm or deny that the senator plans to run.
Edwards is expected to emphasize ways to unite the country, and such a campaign would mark an evolution from his 2004 campaign stump speech that focused on the "Two Americas" of haves and have-nots.
Edwards also plans to travel from New Orleans through the four early presidential nominating states -- Iowa, Nevada, New Hampshire, and South Carolina -- as part of an announcement tour over a couple days between Christmas and New Year's Day.
Among Democrats, Senators Hillary Clinton of New York and Barack Obama of Illinois are drawing the most attention almost two years before the actual vote.
Edwards, however, is considered the leading candidate in Iowa, which holds the nation's leadoff nominating caucus. He was a top fund-raiser in the race for the nomination in 2004 before he became Senator John Kerry's running mate.
Bayh said yesterday he believes the obstacles he was facing were too great to overcome.
"I concluded that due to circumstances beyond our control the odds were longer than I felt I could responsibly pursue," Bayh said. "This path -- and these long odds -- would have required me to be essentially absent from the Senate for the next year instead of working to help the people of my state and the nation."
The announcement comes just two weeks after Bayh, in an appearance on a Sunday talk show, said he would take a first step toward a presidential campaign by forming an exploratory committee.
Just last weekend, Bayh traveled to New Hampshire, the first presidential primary state, but his appearance drew little notice as Obama delivered two speeches to sold-out crowds and attracted hordes of reporters. Bayh joins former Virginia Governor Mark Warner as well-known Democrats who already have decide against a 2008 run.
"The odds were always going to be very long for a relatively unknown candidate like myself, a little bit like David and Goliath," Bayh said in a statement. He added that beyond the question of "whether there were too many Goliaths or whether I'm just not the right David," his chances were slim.
