The Enron scandal rocked stock markets worldwide

The development helps pave the way for prosecutors to persuade Andrew Fastow himself to plead guilty and help their investigation.

Lea Fastow would spend five months in jail under the proposed deal.

Andrew Fastow, who faces 96 criminal charges as well a civil court case, is also negotiating a plea bargain.

Big catch

If Mr Fastow were to agree to plead guilty he would become the most senior Enron official to go to jail.

His co-operation would also be a major boost to prosecutors who are trying to unravel the complex accounting frauds that led to Enron's collapse in December 2001 with debts of about $67bn.

Mr Fastow has declined to comment on the case or press reports that he was on the verge of completing a plea bargain of his own.

Mr Fastow's lawyers were negotiating for him to accept a 10 year jail term in the criminal case which is due to open in April, the Wall Street Journal and Reuters reported.

They reported that he has also agreed to pay a $20m fine to the US Securities and Exchange Commission to settle the civil case against him, citing a source familiar with the matter.

Prosecutors are thought to be hoping that Mr Fastow's co-operation could bring them closer to filing charges against other top ex-Enron officials. Their most likely targets are former chairman Ken Lay and ex-chief executive Jeffrey Skilling.

Several more junior executives already face charges.

Prosecutors were preparing to file charges against Enron's former chief accountant Richard Causey on Thursday but have delayed the move, the Wall Street Journal and Associated Press reported.