The revelation that a political ally of Gaetz, Joel Greenberg, is seeking to strike a plea deal with investigators came during a hearing at federal court in Orlando. The significant step signals that Greenberg could potentially serve as a witness in the Justice Department's investigation into Gaetz.

"I am sure Matt Gaetz is not feeling very comfortable today," Fritz Scheller, a lawyer for Greenberg, said after the hearing on Thursday.

Federal prosecutors are examining whether Gaetz and Greenberg paid underage girls or offered them gifts in exchange for sex, according to two people familiar with the matter who spoke on condition of anonymity.

Gaetz, a Republican, has denied the allegations and insists he will not resign his seat in Congress.

When asked if Greenberg, 36, a former local tax collector outside Orlando, was co-operating with prosecutors on the Gaetz case, Scheller cited lawyer-client privilege. But he said Greenberg's co-operation would likely be contingent on whether it was required by prosecutors to get a plea deal.

Scheller also refused to answer when asked if Greenberg had any incriminating evidence against Gaetz.

Greenberg's legal problems began in June last year when he was arrested on charges of stalking a political opponent.

Last August, Greenberg was charged with sex trafficking a girl between ages 14 and 17 and using a state database to look up information about the girl and other people with whom he was engaged in "sugar daddy" relationships.

He has pleaded not guilty to the charges. Additional charges accusing Greenberg of embezzling $US400,000 from the Seminole County Tax Collector's office were added last month.

Australian Associated Press