In exchange for his "cooperation," Antonio Panzeri was being offered a "limited sentence" that includes imprisonment, a fine and confiscation of one million euros ($1.1 million) in assets, the prosecutors said in a statement.
The development was a dramatic turn in the corruption scandal in which prosecutors suspect Qatar and Morocco funneled bribes through Panzeri and other figures to influence decisions in the European Parliament.
Qatar has denied any wrongdoing and Morocco has accused the media of making unjustified "attacks".
The allegations have roiled the parliament and sparked unease in other EU institutions, with concerns voiced that their public credibility could be shaken.
Panzeri is one of four suspects in pre-trial detention in Belgium following police raids on addresses last month that turned up 1.5 million euros in cash.
The searches were conducted in the homes and offices of MEPs, former MEPs, parliamentary aides, and the heads of NGOs that dealt with the parliament.
All four suspects are being held on charges of "criminal organization, corruption and money laundering".
The other three are: Greek MEP Eva Kaili, stripped of her position as one of the parliament's 14 vice presidents after her arrest; her Italian boyfriend Francesco Giorgi, a parliamentary aide; and Niccolo Figa-Talamanca, the Italian head of an NGO.
- Under surveillance -
Panzeri, a 67-year-old former lawmaker, heads another NGO suspected of receiving money from certain countries to pay serving MEPs to sway parliamentary decision-making on issues important to those countries.
Belgian media said Panzeri was put under surveillance by Belgian intelligence services for at least a month before his arrest.
The reports said he received money from Morocco to promote its interests in the parliament.
Italy has arrested Panzeri's wife and daughter under a warrant issued by Belgium and authorized their extraditions.
But his wife is challenging the court order, and his daughter is expected to follow suit, according to Italian media.
In their later statement saying Panzeri had agreed to turn evidence, the authorities said they were applying a "pentiti" law designed for Mafia cases in which a criminal suspect repents.
It was only the second time in Belgian legal history that the "pentiti" statute has been used.
Prosecutors said that, under the terms of the deal, Panzeri committed to truthfully tell investigators all about "the identity of the persons he admits to having bribed".
He is also to divulge his methods, the "financial arrangements with other involved countries" and "the involvement of known and unknown persons within the investigation".
That last pledge could send chills down the spines of potential suspects who have not been questioned by Belgian authorities.
Already intense scrutiny is being directed at any EU official or lawmaker who has made effusive statements in favor of Qatar or Morocco.
Qatar has highlighted some of those statements which have been made defending it from accusations of worker rights abuses in the lead-up to this year's World Cup, which it hosted, and its bid to get visa-free travel to the EU.
Morocco is keen to win sympathetic positions from Europe to its claim over the disputed Western Sahara, where an Algiers-backed Polisario movement seeks independence.
The European Parliament continues to be rocked by the scandal.
Belgian prosecutors have requested it lift the immunity of two other MEPs, Belgian Marc Tarabella and Italian Andrea Cozzolino, to further their investigations.
The legislature has launched that procedure, likely to be completed next month.
Kaili was not able to assert immunity because a Belgian judge deemed that she was caught red-handed.
European Parliament chief Roberta Metsola announced on Monday proposals to clean up the legislature and protect it from "corruption" and "foreign interference".
They include more checks on who gets access to parliamentary premises, restricting MEPs' activities with non-EU countries, and having a public register of MEPs' finances.