State comptroller Alan Hevesi has decided to resign from office as part of a plea agreement with the Albany County district attorney’s office, which is investigating his alleged misuse of state funds, an Albany newspaper reported, although the prosecutor’s office insisted no deal is in place.

Mr. Hevesi, a Democrat of Queens who is the state’s third-highest ranking official, is expected to resign and plead guilty to a felony charge that allows him to avoid a prison sentence, the Times Union reported on its Web site yesterday evening.

A spokeswoman for the district attorney’s office told The New York Sun there was no deal in place. The official said the Times Union has spoken with a family member or close friend to Mr. Hevesi who told the reporter of the comptroller’s plans.

Since the early fall, Mr. Hevesi, 66, a former New York City comptroller and state assemblyman, has been embroiled in a scandal involving his personal use of employees. The scandal was triggered by a leak from a tipster inside Mr. Hevesi’s office.

In October, the state ethics commission found that Mr. Hevesi knowingly violated the state public officers law by failing to reimburse the state for using state employees as chauffeurs and personal aides for his ailing wife, Carol Hevesi, over a period of three years. The Albany County district attorney’s office has been conducting a separate criminal investigation.

Mr. Hevesi has paid back a total of $206,293.79, more than twice the amount he originally estimated that he owed the state, while insisting that the driver was needed to provide security for his wife.

Amid the public uproar over his actions, Mr. Hevesi managed to defeat his Republican opponent, the treasurer of Saratoga County, by a 17-point margin in the November election. On Election Day, Mr. Hevesi vowed that he would stay in office, telling supporters: “New Yorkers have said clearly that that mistake should not erase 35 years of public service.”

Mr. Hevesi’s resignation would clear away what was threatening to be a major political headache for Governor-elect Spitzer, who abandoned his support for Mr. Hevesi weeks before the November election. Mr. Spitzer said Mr. Hevesi had compromised his ability to perform his responsibilities, which include managing the state’s $140 billion pension fund and auditing state agencies. The presence of a scandal-tarnished comptroller would clash with Mr. Spitzer’s efforts to clean up Albany’s public image.

While Mr. Spitzer has indicated that after taking office on January 1 he would direct the Senate to remove Mr. Hevesi, legal experts have questions the legality of such a move.

If Mr. Hevesi resigns, Mr. Spitzer will nominate a replacement, whose approval will be voted on by the full legislative body, which is dominated by Democrats. The replacement would serve the remainder of Mr. Spitzer’s four year term.