Citing unnamed people briefed on the discussions, the WSJ said Lehman executives were at the company's New York headquarters trying to create a plan that would preserve many jobs and operations of Lehman, whose holding company filed for Chapter 11 bankruptcy protection yesterday.

Meanwhile, the San Francisco-based private equity firm Hellman & Friedman is among several private equity houses that are in the running to acquire Lehman’s asset management unit, media reports said.

A Lehman representative declined to comment on the WSJ article. A US representative for Barclays was not immediately available for comment.

The deal under discussion would fold Lehman's core business - underwriting stocks and bonds, providing merger advice, and securities trading - into Barclays, UK's third-largest bank, according to the WSJ.

But the deal was not certain and questions remained such as the price Barclays might pay and what would become of Lehman's toxic mortgage-security and real estate assets, the report said.