Former IMF chief Dominique Strauss-Kahn smiles during his arraignment hearing at New York Supreme Court in New York in this June 6, 2011 file photo. [Photo/Agencies]

NEW YORK - The sexual assault case against former International Monetary Fund chief Dominique Strauss-Kahn is near collapse, the New York Times reported on Thursday, raising the prospect an epic political comeback in France.

Strauss-Kahn, 62, a steward of the world economy and a leading candidate for the French presidency when he was arrested on May 14, may now be released on his own recognizance and freed from house arrest as soon as Friday, the paper said.

A source familiar with the case said on Thursday that the credibility of the maid who accused him has come into question.

"The credibility is in question," the source, speaking on condition of anonymity, told Reuters.

The New York Times said prosecutors had met with Strauss-Kahn's lawyers on Thursday and the parties were discussing whether to dismiss the felony charges.

Strauss-Kahn's defense attorney, Benjamin Brafman, said earlier on Thursday that their client would go back to court in New York on Friday at 11:30 am before Judge Michael Obus to seek changes to his bail conditions.

"Indeed, Mr. Strauss-Kahn could be released on his own recognizance, and freed from house arrest, reflecting the likelihood that the serious criminal charges against him will not be sustained," the paper said. "The district attorney's office may try to require Mr. Strauss-Kahn to plead guilty to a misdemeanor, but his lawyers are likely to contest such a move."

Strauss-Kahn resigned from the IMF on May 19 and pleaded not guilty on June 6, vehemently denying the allegations. He faced up to 25 years in prison if convicted.