Fearing for Sun Il's life, Uri party MP Kim Won-Woong said any new deployment would make Koreans a major target for Iraqi dissident groups.
He said about 40 lawmakers were ready to submit a resolution on Wednesday aimed at scrapping or reconsidering the planned additional troop deployment in Iraq.
"We began to see a cautious sign of hope," South Korean Vice Foreign Minister Choi Young-Jin was quoted as saying in his briefing to President Roh Moo-Hyun.
Choi Seung-Gap, president of South Korean security company NKTS in Jordan, had said negotiations were under way between an Iraqi colleague and the Islamist dissident group holding Kim, South Korea's Yonhap news agency reported.
Protesters demand cancellation
of S Korea's troop dispatch
"I've heard from a local Iraqi colleague of mine that Kim is safe. Negotiations are ongoing and I've just heard the captors expressed intent to release Kim if their demand is met," Yonhap quoted Choi as saying.
Choi declined to comment on where in Iraq the talks were taking place, nor any of the conditions involved in the negotiations.
Jamat al-Tawhid and Jihad, allegedly led by Jordanian Abu Musab al-Zarqawi, threatened on Sunday to behead Kim - abducted last Thursday near Falluja - in 24 hours if South Korea did not cancel its plan to deploy troops to Iraq.