I am looking for an answer for the following:
which of the following sentences is correct and why?
1) It is me who is ready.
2) It is I who am ready.
both have confused me. ... Any answer please.
No need for confusion. 1 is right in spoken English. There would be few occasions to express this in writing, but if required to I would use 'I'. But the syntax of 2 is painfully correct (some would say over-correct) so most people would reword it as something like 'I'm ready[, for one]' or 'I'm the one who's ready'.