Young is thought to have been head-hunted to take up a role as chair of the Care Quality Commission, a new "super-regulator" to oversee delivery of healthcare.
The Agency refused to comment about Young’s departure but confirmed that she was to see a selection committee today.
Young has led the Environment Agency since December 2000 and has developed a reputation for trenchant views and straight talking. She was recently highly critical of government’s decision to back nuclear power and also spoke out against plans to revisit proposals for a Severn tidal barrier.
Her departure is likely to be just ahead of publication of Sir Michael Pitt’s review into last summer’s catastrophic flooding across the Midlands and Yorkshire. This is expected to raise questions about the Agency’s flood defence role over the last decade.
ICE vice president and chief executive of the Association of Drainage Authorities Jean Venables paid tribute to Young’s work at the Agency.
"Barbara Young is a strong character who has been very prominent in the industry," she said. "We have not always shared the same opinion but have enjoyed our debates. I am sure that she will be just as active in her new role."
It is understood that Environment Agency chairman Sir John Harman is also set to step down later this year.