The legislation would give the attorney general the ability to deny a gun purchase if the buyer was found "to be or have been engaged in conduct constituting, in preparation for, in aid of, or related to terrorism," The New York Times reported Friday.
U.S. Sen. Frank R. Lautenberg, D-N.J., who sponsored similar legislation that died in the Republican-controlled Congress, introduced the current bill.
"It took years, but the administration finally realized that letting terrorists buy guns is dangerous," he said in a statement.
Under current law, suspects on federal watch lists for suspected terrorists can buy guns if background checks don't turn up any of the standard prohibitions for gun buyers, such as felony convictions.
A Government Accountability Office review found that in 2005 federal law enforcement officials approved 47 of 58 gun applications from terrorism suspects in a nine-month period, the Times reported.