Gain-of-function research is the controversial practice of increasing a virus' transmissibility or lethality to study the development of new diseases.
The NIH in 2014 gave a $600,000 donation to the Wuhan Institute of Virology (WIV), through US-based non-profit EcoHealth Alliance to study bat coronaviruses, the Daily Mail reported.
WIV, which is also central to the lab leak theory for Covid-19's origins, is thought to practice gain-of-function research.
While the WIV was told not to use the funds for gain-of-function research, there was no way to know the truth, former NIH Director Francis Collins was quoted as saying.
Federal funding for the practice was banned under President Barack Obama in 2014, the NIH overturned the decision in 2017, the report said.
Dr Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID), has also asserted the US funding was not used for gain-of-function research.
"For the last decade, Dr Fauci has funded gain-of-function research on SARS viruses, and until we get to the bottom of the origins of Covid-19, the federal government should not provide another dime in funding for viral gain-of-function research in the name of global health,' Sen. Roger Marshall, R-Kansas, said in a statement.
The moratorium would ban all federal research grants to universities and other organisations funding gain-of-function research, the report said.
Fauci has, meanwhile, defended the NIH offering the Chinese lab the money, as he claimed they did not use it for gain-of-function.