"The states are expecting to see a proposal this week," an official from the Illinois Attorney General's Office said today, declining further comment.
An official from another state attorney general's office said Microsoft already had submitted a proposal, but added that lawyers from that state had not yet reviewed it.
Representatives from the Justice Department (DOJ) and from other states declined to comment publicly.
Microsoft, which recently reiterated its willingness to settle the four-and-a-half month trial, said it expected to discuss a possible settlement soon, but declined to elaborate.
"We're not going to make any comments whatsoever about any potential settlement conversations, should they occur," said Microsoft spokesman Mark Murray. "This process is only going to be successful if it can occur in a confidential manner."
The Justice Department and 19 states allege Microsoft is a monopolist that illegally harmed competitors in its attempt to maintain its Windows dominance and create a new monopoly for Internet software. Microsoft vigorously denies the charges. Some legal observers say Microsoft has made critical mistakes in defending itself in federal court in Washington.
The trial, which is now in recess, is scheduled to resume on April 12, but may be delayed further because of a drug conspiracy case being heard by the same judge.
Word of the proposal comes as state prosecutors from across the nation meet in Washington for an annual meeting of the National Association of Attorneys General. Among the attendees are a number of assistant attorneys general overseeing the joint action against Microsoft, some of whom are believed to be charged with reviewing the proposal.
Government officials and those from the Redmond, Washington, software company say they have always been open to settling the case. But it is unclear what has changed since last May, when the two sides entered in to negotiations but failed to reach any agreement.
In recent statements, Microsoft has made clear that it intends to defend its right to add new features to its product, a key stumbling block in last year's talks.
Antitrust officials, still skeptical of Microsoft's earlier attempt to settle the case, privately questioned Microsoft's most recent settlement overtures. They criticized Microsoft for talking to the press about a settlement before discussing the matter privately with them. Microsoft says it is taking serious suggestions made to both sides by U.S. District Judge Thomas Penfield Jackson to try to settle the case which the case is in recess.
Yesterday, Joel Klein, the U.S. assistant attorney general who heads the Justice Department's antitrust division, said his office had not received any settlement proposals from Microsoft. A Justice Department spokeswoman said today she had no additional comment.