Reportedly, Digvijay has agreed to fight against Modi and the party has sought the opinion of the local Congress uniton the matter, sources added.
Congress released its third list of candidates on Tuesday. However, the party had not revealed who would contest against the Gujarat chief minister.
Senior Congress leader P Chidambaram had said thatCongress would field a strong candidate against Narendra Modi in Varanasi constituency, where AAP chief Arvind Kejriwal is also expected to take on the BJP's prime ministerial candidate.
Digvijay has always been a strong critic of Modi. Last month, at a public event he had dubbed Modi as a political leader of "hard core communalist ideology, who has now moved ahead of the BJP and the Sangh."