A senior source in President Barack Obama's administration said a final decision had not been made and an internal review was still under way.
The revelations about National Security Agency monitoring of Mrs Merkel were the latest in a months-long spying scandal that has strained long-standing alliances with some of America's closest partners.
Senator Dianne Feinstein, chairwoman of the Senate Intelligence Committee, called for a "total review of all intelligence programmes".
She said the White House had told her "collection on our allies will not continue".
The administration official said that statement was not accurate, but added some unspecified changes had already been made and more were being considered, including terminating the collection of communications from friendly heads of state.
Ms Feinstein said while the intelligence community has kept her up to date on other issues, like the court orders on telephone record collection, intelligence officials failed to brief her on how they followed foreign leaders.
Her statement follows reports based on new leaks from former National Security Agency (NSA) systems analyst Edward Snowden indicating the agency listened to Mrs Merkel and 34 other foreign leaders.
Ms Feinstein added: "With respect to NSA collection of intelligence on leaders of US allies - including France, Spain, Mexico and Germany - let me state unequivocally: I am totally opposed."
She added that the US should not be "collecting phone calls or emails of friendly presidents and prime ministers" unless in an emergency with approval of the president.
European Union officials who are in Washington to meet politicians ahead of White House talks said US surveillance of their people could affect negotiations over a US-Europe trade agreement. They said European privacy must be better protected.