U.S officials once described the confession of accused 9-11 mastermind Khalid Sheikh Mohammed as a gold mine of intelligence that proved his role in a litany of terrorist plots.

However, now his admissions — because they were made during interrogations in which he was waterboarded 183 times — have become a liability for the Justice Department as it readies to hold him accountable in a U.S. court.

As a consequence, prosecutors who are preparing the case against Mohammed and other Sept. 11 defendants are faced with piecing together a much more complicated narrative that will need to include seized evidence, financial transactions, recorded phone conversations and a shadowy web of cooperating witnesses willing to betray al Qaida in court.

Forget Manhattan — Attorney General Eric Holder, under increasing political pressure, is now considering the possibility of moving the trials of Khalid Sheikh Mohammed and the other alleged 9/11 plotters to military tribunals and out of civilian courts entirely.

The Obama administration on Friday gave up on its plan to try the Sept. 11 plotters in Lower Manhattan, bowing to almost unanimous pressure from New York officials and business leaders to move the terrorism trial elsewhere.

The Obama administration on Wednesday lost its most prominent backer of the plan to try the self-described mastermind of the Sept. 11 attacks in Lower Manhattan when Mayor Michael R. Bloomberg said the trial should not be held in New York City.

Mr. Bloomberg said that a more secure location, like a military base, would be less disruptive and less costly. His remarks echoed growing opposition from Wall Street executives, the real estate industry and neighborhood groups, who have questioned the burdens that such a trial would bring to a heavily trafficked area of the city.

A federal grand jury in New York is now hearing evidence and testimony in the 9-11 terror case, NBCNewYork.com has learned. The Justice Deparment is moving forward in seeking an indictment against self-proclaimed 9-11 mastermind Khalid Sheikh Mohammed and four other terror suspects.

The panel of everyday New Yorkers was convened after Attorney General Eric Holder announced the alleged 9-11 plotters would face civilian trial in New York instead of a military tribunal. If the alleged plotters are convicted, prosecutors intend to seek the death penalty.

In its firestorm of coverage, the mainstream media has overlooked a potential link between the two biggest domestic terrorism stories of the day: the shootings at Ford Hood and the decision by the Justice Dept. to try accused 9/11 “mastermind” Khalid Shaikh Mohammed in New York City.

His name is Ali Abdel Saoud Mohamed, aka Ali Amirki or “Ali the American,” the ex-Egyptian Army officer who penetrated the CIA (briefly) in 1984, the John F. Kennedy Special Warfare Center at Fort Bragg from 1987 to 1989 and the FBI where he served as an informant from the early 1990’s, interacting with top federal prosecutors and Special Agents as he trained the cell responsible for the 1993 World Trade Center bombing and “Day of Terror” plots. Earlier he moved Osama bin Laden’s entourage from Afghanistan to Khartoum, set up the al Qaeda training camps in the Sudan, trained the Saudi billionaire’s own personal bodyguard and later served as the principal plotter in al Qaeda’s five year mission to blow up the U.S. Embassies in Kenya and Tanzania.

Ali Mohamed was the ticking time bomb at Fort Bragg who should have redefined the Army’s rules for uncovering traitorous Islamic radicals in the ranks 20 years before Maj. Nidal Malik Hassan went on his alleged rampage at Fort Hood.

But more importantly, for all the critics who think trying KSM in the Southern District of New York is a bad idea, Ali Mohamed could represent the Feds’ best witness at trial; insuring once and for all that Khalid Shaikh will finally be brought to justice.

Khalid Shaikh Mohammed, the self-described mastermind of the terrorist attacks of Sept. 11, 2001, and four other men accused in the plot will be prosecuted in federal court in New York City, the United States attorney general announced Friday.

But the administration will prosecute another set of high-profile detainees now being held at the military prison at Guantánamo Bay, Cuba — Abd al-Rahim al-Nashiri, who is accused of planning the 2000 bombing of the Navy destroyer Cole in Yemen, and four other detainees — before a military commission.

The confessed 9/11 mastermind and four other killers from Guantanamo Bay may soon be flown to New York to face death penalty trials, the Daily News has learned.

Attorney General Eric Holder and Defense Secretary Robert Gates will decide by Nov. 16 whether to yank the plotters out of the U.S. base in Cuba and send them to a courthouse blocks from Ground Zero, officials confirmed.

The Justice Department is prepared to swiftly indict five detainees linked to 9/11 - including ex-Al Qaeda "military commander" Khalid Shaikh Mohammed - if Gitmo trials are scrapped, officials said.

That outcome is highly probable.