Tata, which bought former British Steel company Corus in 2007, has received shareholder approval to raise 1bn.
The company will decide the form of fundraising over the next three to four weeks and plans to raise the funds by March 2011.
Tata recently announced plans to spend 6.5m on hi-tech equipment for its Stocksbridge plant in South Yorkshire, helping to secure the jobs of around 2,000 steelworkers.
The investment is a welcome lift to the sector after the coalition Government cancelled an 80m loan to Sheffield Forgemasters in June.
Tata's two new remelting furnaces and testing equipment will boost its aerospace steel output by 30 per cent, creating 10 jobs.
Yesterday Tata, the largest shareholder in Africa-focused miner Riversdale, said it has not yet decided whether to bid for the company.
The Indian firm's managing director Hemant Nerurkar said the company was not concerned that Rio Tinto has made an offer to buy Riversdale, adding that Tata Steel is happy to work with any company that assures its coal supply.
Tata Steel owns 24 per cent of Riversdale.
Anglo-Australian miner Rio Tinto has offered 2.5bn to buy Riversdale as it seeks to secure coking coal reserves sought after by steelmakers. Tata Steel's director on Riversdale's board has abstained from voting on the deal.
Tata also said it is looking for raw material assets in Australia, Canada and South Africa.