Zelaya, who was forced out of Honduras in a coup on June 28, has sheltered at the Brazilian embassy with about 60 aides since he returned to the country on September 27 in defiance of an arrest warrant.
Delegates from OAS member states including the United States, Canada and eight Latin American countries are brokering the negotiations between representatives of Zelaya and Roberto Micheletti, Honduras' de facto president.
Insulza on Wednesday presented a plan that would restore Zelaya as head of a unity government in return for him dropping any ambitions to change the constitution.
The proposal, which would grant amnesty to both Zelaya and the heads of the government, is similar to a plan by Oscar Arias, the president of Costa Rica, which was opposed by the interim government when it was presented weeks ago.
Micheletti has led the military-backed interim government since Zelaya was forced out of the presidential palace over his plan to hold a non-binding referendum on the constitution.
|Zelaya has sheltered at the Brazilian embassy in Tegucigalpa for nearly three weeks [EPA]
Zelaya's attempt to hold the public vote had faced opposition from the Honduran congress, supreme court and the head of the military, who each said that he was trying to extend presidential term limits to enable him to stay in office.
The deposed leader has denied those claims, saying that the vote was aimed at improving conditions for the poor in Honduras.
Marta Lorena Alvarado, Honduras' interim vice-president, said she did not think that a deal would be reached on Wednesday.
"It would be fantastic, but the problem is difficult and there are a lot of players. I don't think it will be today," she said.
But she added that the two sides were "initiating conversations that had not occurred before and expectations are positive".
Micheletti had said on Tuesday that the OAS-brokered talks would cover the main points of the dispute, including an amnesty for Zelaya.
"I believe the time is right to intensify the national dialogue," he said.
However, on Wednesday Zelaya said that he believed de facto leadership would try to seize control of the negotiations.
"We warn the ministers that the de facto regime is planning to stay in power longer and to deepen the crisis by preventing the return of the elected president and continuing the repression of the people," Zelaya said in a statement.
Marcia Facusse, a spokesperson for the interim government, said Micheletti was willing to step down only if Zelaya agreed to give up his claim to the presidency.
"From there, we can find a place to start the dialogue because the conflict would cease to be about two men and become a search for what's best for the country," Facusse told HRN radio.
Arias's earlier plan had called for Zelaya to be reinstated as Honduras' president pending national elections scheduled to take place on November 29, but the interim government has said repeatedly that it would not accept such a scenario.