Kenneth Feinberg, the Obama administration's pay czar, is being pressed by federal officials to relax executive compensation restrictions at American International Group Inc for 2010, the Wall Street Journal reported, citing people familiar with the matter.

The officials believe very severe curbs could harm the insurer and eventually the taxpayers, according to the paper.

AIG, which has received up to $180 billion of federal aid, including more than $80 billion in loans, is 80 percent-owned by U.S. taxpayers.

Last month, Feinberg slashed compensation for top earners at seven bailed-out companies including AIG for the final two months of the year.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Dan Lalor)