Nigeria's presidents should be allowed a third term in office, a Nigerian Senate sub-committee has proposed.
Obasanjo has yet to say whether he would like to contest polls again
This goes against the recommendation of the national conference on political reform, which voted to maintain two four-year terms of office in July.
A BBC reporter in the capital says the committee's recommendations are likely to be approved by MPs and Senators.
The current constitution would have to be changed to allow President Olusegun Obasanjo to run in the 2007 elections.
Some 400 delegates attended a National Political Conference earlier this year to recommend changes to the constitution that was written under military rule, which ended in 1999.
The committee is analysing their proposals so constitutional changes can be made before the 2007 elections.
The BBC's correspondent Jamilah Tangaza in Abuja says the third-term debate - which also applies to state governors - is a controversial issue in the country with opponents and proponents deeply divided on the issue.
Abubakar helped President Obasanjo win two elections
Meanwhile, the battle for the succession to the presidency continues within the ruling People's Democratic Party (PDP), as some members have split from the ruling party to form their own movement.
The Movement for the Defence for Democracy (MDD), which includes the former PDP chairman and an ex-minister, says it wants to take over power from the existing PDP.
Observers say the split hinges on who should be on the 2007 PDP ticket for president.
Mr Obasanjo has yet to say whether, if allowed, he would like to contest again, but his vice-president, Atiku Abubakar, has never hidden the fact that he would like to be their candidate.
Mr Abubakar's supporters feel the vice-president and some state governors were sidelined during the PDP congresses which ended at the weekend.
In 1999 and again in 2003 the Obasanjo/Abubakar ticket proved an election winner for the PDP, with the vice-president helping deliver the northern, Muslim votes that Mr Obasanjo needed to win.