The boys and girls categories' upper age limits are said to be rising from 25 to 28, while the older category will now be known as 'Over-28s', reports The Sun.
The change is intended to give 26 and 27-year-olds a greater chance of making it through after they were overlooked last year.
A source said: "Last year's crop of wannabes was awful, largely because there were too many youngsters.
"Lots of girls and boys in their late twenties auditioned, but there was no room for them because the Over-25s category had to have the quirky older ones in it to make it work.
"The show basically snookered itself, so Simon has decided to make the change. And this year there are again loads of amazing performers who are older than 25 but younger than 28."
[Matt Cardle benefited from a change to the X Factor age brackets during the 2010 series]
The insider added: "There is no way show bosses will make the same mistake again, so the age limits have changed. This year's show is now shaping up to be one of the best ever."
Cowell previously changed the age ranges in the 2010 series, which saw eventual winner Matt Cardle being placed into the boys category from the older group.
Gary Barlow, Tulisa Contostavlos, Louis Walsh and Nicole Scherzinger will attend the Boot Camp stage of the show this week.
The Boot Camp will take place in Liverpool this year, after it was moved from London due to the Olympics.