To be totally honest with you, the news is that there isn't really any news. I mean, the gossip world is still abuzz about remaking My Fair Lady - I guess they really want it to happen - and places from wee celebrity gossip sites to The Guardian are feeding the flames with their "inside news," but after doing some digging, I can only tell you what's not happening.
Keira Knightley is not playing Eliza Doolittle. I know some of you will breathe a huge sigh of relief over this (myself included). Perhaps at one time she was attached to the project, or at least hoped she would be cast, as director Joe Wright, who has worked with Keira on both Atonement and Pride and Prejudice, was once on board to direct Lady. But he is off now, and so is any thought of Keira as Eliza.
Carey Mulligan is not playing Eliza either. Though she is linked to the project on IMDb, and screenwriter Emma Thompson herself said that Carey had been definitively cast via The Guardian, poor befuddled Carey herself shoots down that pesky rumor in an interview on Collider.
Daniel Day-Lewis isn't playing Henry Higgins, and neither is Hugh Grant. Just to clarify.
In short, no one has signed on yet, as far as anyone can tell, and the only thing that is for certain is that there is a screenplay, and Emma Thompson wrote it. Beyond that, just gossip. Also, remember that this remake has been in the works for ages now, much like the infamous Why Can't I Be Audrey Hepburn?