Unnamed sources told Reuters that the changes will be laid out in a new bill set to be unveiled by Senate Banking Committee chairman Christopher Dodd.
The proposals will also allow the Fed to maintain most of its present authority over the banking sector.
Furthermore, the plans involve a new government watchdog for financial consumers being set up under the remit of the Fed.
Mr Dodd is set to present his bill to the media later today (March 15th 2010).
He said that he would not countenance Republican demands for additional time to draw up a programme of reform for the Fed, calling such requests "terribly naive".
Mr Dodd added: "If you want to work with me ... we can do it.
"If you don't, you can walk away or delay or say we shouldn't be meeting. But if you're interested in getting a bill, the door is open."
His move to grant the Fed additional power is a reversal of his position in 2009, when Mr Dodd criticized the regulator by stating that its record as an overseer of the banking system had been an "abysmal failure".
The first draft of his reform plan proposed removing the consumer protection and bank supervision duties from the remit of the Fed, but it is believed he has been talked out of making such a move by figures such as Ben Bernanke, the regulator's chairman.
Earlier this year, Mr Bernanke was re-elected for a second term of office at the regulator â but only after a vote which made him the least popular chairman in the history of the organization.
He was voted back in by 70 votes to 30, with the number of 'no' votes far surpassing the previous record of 16 set by Paul Volcker in 1983.
By Claire Archer