The 24-year old Zazi had insisted he had "no ties, no connection to al Qaeda" in interviews with reporters earlier this week after his name surfaced in connection with the investigation.

But after two eight-hour interrogations at the FBI offices in Denver on Wednesday and Thursday, Zazi told a different story this morning, the law enforcement official said.

The plea negotiations were first reported by the New York Daily News.

Zazi's lawyer, Art Folsom, told ABCNews.com Friday night that no plea deal "has been offered." He said Zazi will go through a fourth day of questioning Saturday at the FBI offices. Folsom refused to answer questions about the specific discussions taking place, but said his client is continuing to cooperate with investigators.

Folsom called the reports "completely unfounded."

Zazi has been under investigation for almost a year, according to law enforcement and intelligence officials. The CIA reportedly first learned of his alleged al Qaeda ties when Zazi visited Pakistan and officials said they later learned of "deeply troubling" conversations that were picked up on government intercepts.

Zazi and Folsom had maintained his trips to Pakistan were only to visit his wife.

A spokesperson for Folsom said the FBI has requested that Mohammad Zazi -- Najibullah Zazi's father -- meet with investigators at FBI headquarters in Denver this afternoon.

Law enforcement officials in New York have questioned at least 12 men about their connections to Zazi, who arrived in New York after a 1,777 mile drive from Denver. His trip to New York triggered a series of raids by heavily armed police and federal agents.

Authorities told ABCNews.com that Zazi's computer contained bomb-making directions and an explosives recipe that would have produced homemade bombs of the same size and type used in the terror attacks on the London subways in July 2005.

No one was arrested in the New York raids and no explosives were found, officials said.

Officials said Zazi, his lawyer and federal prosecutors were in discussions that would involve the suspect pleading guilty to a counter of material support for terrorism.

Authorities say if Zazi fully cooperates, his knowledge of possible targeting and other plots aimed at the United States could provide an intelligence windfall.

By RICHARD ESPOSITO, CLAYTON SANDELL and BRIAN ROSS