Hagen, who led the Progress Party from 1978 to 2006, has confirmed internally to the party that he would be keen to take a place on the committee, according to newspaper VG.
The former leader, who often expresses his strong anti-Islam views, confirmed to news bureau NTB last month that he would be interested in the role on the committee, which selects the annual winner of the Nobel Peace Prize.
Former Nobel Committee secretary Geir Lundestad told broadcaster NRK that Hagen “would not be a good candidate”.
“Hagen is a well-discussed person and likes speaking to the media. That does not make him well-suited to the committee,” Lundestad said.
Labour leader Jonas Gahr Støre said that it would be problematic for Hagen to sit on the committee while a deputy representative in parliament, meaning the former leader can stand in in the absence of regular MPs.
The Committee's five members are appointed by the Norwegian Parliament, as stipulated by Alfred Nobel in his will.
Although rules prevent currently-serving MPs from sitting on the Nobel Committee, it is unclear whether these also apply to deputy members, writes VG.
“I will today contact the [Nobel Committee] presidency and other parliamentary leaders to hear their views. I am critical of it,” Støre told NTB.
Although the Progress Party's own committee has selected Hagen, it is not certain he will be the final candidate from the party. A final vote, in which the entire parliamentary group from the party will choose its candidate, is scheduled for Wednesday.
“I appreciate tge nomination by the committee and await the next stage of the process. I have no further comment,” Hagen told VG.
Hagen lost out to Ytterhorn in a similar bid to join the committee six tears ago.
Norway's political parties usually nominate their representatives to the Committee based on their individual areas of expertise.