Opposition from Michael Bloomberg, the mayor of New York, and legislators in Washington prompted a change in plans.
A reversal on the 9/11 trial would represent the latest backtracking on an issue that Barack Obama, the US president, said had damaged perceptions of the US abroad.
The possible shift won plaudits from Republicans as a "step in the right direction" but they signalled they would continue to push Obama for more, including keeping open the US military prison at Guantanamo Bay, Cuba, despite his pledge to shut the controversial facility.
When Obama took office in January 2009, he set a one-year deadline to close the Guantanamo but various political and diplomatic complications have arisen to force a delay.
Meanwhile, a bipartisan group of senators offered legislation aimed at forcing the administration to prosecute terrorism suspects, like Mohammed, in the military system.
That legislation, along with local opposition to the New York trials, has caught the Obama administration off guard and forced the reconsideration.
The administration plans to prosecute almost three dozen terrorism suspects held at Guantanamo Bay but has not announced where all the trials will be held and whether they will be criminal or military.
So far, only one Guantanamo detainee, Ahmed Khalfan Ghailani, has been sent to federal criminal court for trial.
He has been accused of being involved in the bombings of US embassies in Africa.