It comes after McGregor, 32, claimed he would take part in another big money boxing fight after his 2017 fight against Floyd Mayweather.
In a series of tweets last night, McGregor addressed his UFC situation and claimed a bout against Pacquiao was on the cards.
He wrote: "Here’s the finish of that exchange. Pre covid. Pre retirement. Never turned down offer of Tony as was suggested at the time. I stated months in advance (early February) that I was not interested in being an alternate for two consistent pullouts. Pushed for my own scheduled bouts."
The Dubliner added: "I was pushing hard for the season. Multiple opponents, multiple dates offered throughout. All to take place back to back.
"Then when covid hit and the talk was that I would have to wait for crowds again, I walked away from the situation. I was waiting long enough at that stage."
He then spoke about a fight against the 41-year-old Filipino. "Anyway all water under the bridge who gives a fook.I’m boxing Manny Pacquiao next in the Middle East."
Anyway all water under the bridge who gives a fook.
I’m boxing Manny Pacquiao next in the Middle East.— Conor McGregor (@TheNotoriousMMA) September 25, 2020
It will be a true honour to have faced two of the greatest boxers of the modern era, afraid of a fight.
Advertisement— Conor McGregor (@TheNotoriousMMA) September 25, 2020
Now it looks like Pacquiao, who is now a senator in the Philippines, has confirmed the fight.
A statement from his office said funds from the fight would be used for the Covid-19 relief effort in his native country.
A statement from Pacquiao's office read: "For the sake of all the Filipino Covid-19 victims, Senator Manny Pacquiao will be fighting UFC superstar Conor McGregor next year.
"The huge portion of his earnings will proceed to those who are affected nationwide by the pandemic."
Both fighters are "getting ready for this one epic last boxing fight," said Jayke Joson, special assistant to Pacquiao, who is also a Philippine senator.
McGregor announced on Twitter in June that he was retiring from the sport for the third time. He first quit the sport in April 2016. In March 2019, he again announced he was hanging up his gloves, but on both occasions the retirements were short-lived.
Negotiation between the two camps "is now starting to move on", Joson said, adding a "huge portion" of Pacquiao's earnings would go to those who were affected by the pandemic.
Total confirmed coronavirus cases in the Philippines surpassed 300,000 on Saturday, while deaths rose to 5,284.
The Philippines has the most confirmed Covid-19 infections in Southeast Asia and the region's second highest number of coronavirus deaths, next to Indonesia.
Pacquiao, whose speed and power belie his age, is the only man in boxing history to hold world titles in eight different divisions. He defeated Keith Thurman to win the WBA Welterweight Super Championship in July, taking his record to 62-7-2 with 39 knockouts.
