A White House spokesman says BP's ruptured oil well is leaking at the top, along with seepage about two miles away.
Robert Gibbs also says officials are monitoring bubbles that can be seen on an underwater camera.
Leaks could mean the cap on the well has to be opened to prevent oil and gas from escaping elsewhere.
The mechanical cap on the well stopped the flow of oil into the Gulf of Mexico on Thursday.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
NEW ORLEANS (AP) -- The federal government Monday allowed BP to keep the cap shut tight on its ruptured Gulf of Mexico oil well for another day despite the possibility something is seeping from the sea floor near the well.
The Obama administration's point man for the spill, retired Coast Guard Adm. Thad Allen, said early Monday that the company promised to watch closely for signs of new leaks around the mile-deep well, which has stopped gushing oil into the water since the experimental cap was closed Thursday.
Late Sunday, Allen said something was detected seeping near the broken oil well and demanded in a sharply worded letter that BP step up monitoring of the ocean floor. Allen didn't say what was seeping. White House energy adviser Carol Browner told the CBS "Early Show" the possible seepage was found less than two miles from the well site.
The concern all along -- since pressure readings on the cap weren't as high as expected -- was a leak elsewhere in the well bore, meaning the cap may have to be reopened to prevent the environmental disaster from becoming even worse and harder to fix. An underground leak could let oil and gas escape uncontrolled through bedrock and mud.
"When seeps are detected, you are directed to marshal resources, quickly investigate, and report findings to the government in no more than four hours. I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed," Allen said in a letter to BP Managing Director Bob Dudley.
When asked about the possible seepage and the monitoring, BP spokesman Mark Salt would only say that "we continue to work very closely with all government scientists on this."
Shares of BP PLC were down slightly Monday as investors worried about the possible seepage and an apparent rift between the oil giant and the U.S. officials in charge of the spill.
Allen said BP could continue testing the cap, meaning keeping it shut, only if the company continues to meet their obligations to rigorously monitor for any signs that this test could worsen the overall situation.
Browner said Allen's extension went until Monday afternoon.
"Clearly we want this to end. But we don't want to enter into a situation where we have uncontrolled leaks all over the Gulf floor," Browner said Monday ABC's "Good Morning America"
BP PLC said Monday that the cost of dealing with the oil spill has now reached nearly $4 billion. The company said it has made payments totaling $207 million to settle individual claims for damages from the spill along the southern coast of the United States. Almost 116,000 claims have been submitted and more than 67,500 payments have been made, totaling $207 million.
With the newly installed cap keeping oil from BP's fractured well out of the Gulf during a trial run, this weekend offered a chance for the oil company and government to gloat over their shared success -- the first real victory in fighting the spill. Instead, the two sides have spent the past two days disagreeing over what to with the undersea machinery holding back the gusher.
The apparent disagreement began to sprout Saturday when Allen said the cap would eventually be hooked up to a mile-long pipe to pump the crude to ships on the surface. But early the next day, BP chief operating officer Doug Suttles said the cap should stay clamped shut to keep in the oil until a permanent fix.
The company very much wants to avoid a repeat of millions of gallons of oil spewing from the blown well for weeks, watched live across the country on underwater video.
If the valves are kept closed, as BP wants, it's possible that no more oil will leak into the Gulf of Mexico. Work on a permanent plug is moving steadily, with crews drilling into the side of the ruptured well from deep underground. By next week, they could start blasting in mud and cement to block off the well for good.
But the government is worried that the cap on the well is causing oil and gas to leak out elsewhere, which could make the sea floor unstable and cause the well to collapse. That's why federal officials want to pump the crude to ships on the surface. That would require opening the well for a few days to relieve pressure before the pipes could be hooked up, letting millions more gallons of oil spill out in the interim.
It will take months, or possibly years for the Gulf to recover, though cleanup efforts continued and improvements in the water could be seen in the days since the oil stopped flowing. Somewhere between 94 million and 184 million gallons have spilled into the Gulf since the BP-leased Deepwater Horizon rig exploded April 20, killing 11 people and touching off one of America's worst environment crises.
Weber reported from Houston. Associated Press writer Jay Reeves in Orange Beach, Ala., Tom Strong in Washington, AP video journalist Haven Daley in Biloxi, Miss., and Robert Barr in London contributed to this report.