The arrangement will see Britain and Canada share consular services in countries where one of them does not have an embassy, a spokesman for Britain's Foreign Office said.
Reports said that the deal could also eventually involve embassy-sharing with Australia and New Zealand.
Hague and his Canadian counterpart John Baird were to sign an agreement in Ottawa ahead of a press conference revealing more details of the plans.
"As the prime minister said when addressing the Canadian parliament last year: 'We are two nations, but under one Queen and united by one set of values'," Hague said ahead of the meeting.
"We have stood shoulder to shoulder from the great wars of the last century to fighting terrorists in Afghanistan and supporting Arab Spring nations like Libya and Syria. We are first cousins.
"So it is natural that we look to link up our embassies with Canada's in places where that suits both countries. It will give us a bigger reach abroad for our businesses and people for less cost."
Queen Elizabeth II is head of state in Canada, Australia and New Zealand as well as 12 other Commonwealth realms and Britain itself.