The Russia probe burrowed deeper into U.S. President Donald Trump's inner circle Friday, with a high-profile presidential confidant suddenly co-operating in the dig for fresh details against his former allies.

Michael Flynn, Trump's former national security adviser and top campaign aide, turned himself over to authorities and pleaded guilty to lying to the FBI about two interactions with the Russian government.

But that's not the worst news for the White House.

Flynn announced he's co-operating with authorities, following days of reports he was negotiating a deal — granting him more lenient treatment in exchange for working with Robert Mueller's Russia probe.

"I am working to set things right," Flynn said in a statement.

"My guilty plea and agreement to co-operate with the special counsel's office reflect a decision I made in the best interests of my family and of our country."

The terms of the deal mean Flynn will agree to testify and share information about others in exchange for lighter sentencing. The crime he's admitted to carries a maximum five-year sentence.

But Flynn has avoided charges on his other alleged misdeeds: unregistered foreign lobbying, undeclared foreign income and undeclared contacts with foreign officials. Friday's settlement agreement makes clear he could have faced additional charges.

The stock market dipped instantly on one report from ABC News: that Flynn has promised to testify against Trump.

The news sent a political thunderclap through Washington, overshadowing major tax changes advancing through Congress, with a bill progressing through the Senate that would drastically cut corporate taxes and, according to congressional analysts, mean long-term benefits for the rich but hurt the middle and lower classes.

Yet there were still ripples of unconcealed glee in a capital where the administration is deeply detested.

One Washington bar is offering $5 drinks to celebrate whenever someone is charged in Mueller's Russia probe; it announced that Friday's Michael Flynn happy hour special was starting at 4 p.m.

The news was greeted with a yawn from the White House — at least in its public statements.

A lawyer for the president said in a statement that Flynn had been a senior defence official in the Obama administration, only worked 25 days in the Trump administration and had lied to everyone.

"Nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn," said the statement from Trump lawyer Ty Cobb.

But the charge sheet hints at a broader story.

It refers to several conversations with senior Trump transition officials in December, setting up — and later discussing — phone calls with Russian and other foreign officials about which Flynn later lied to the FBI.

In one case, he called a senior official at Trump's Mar-A-Lago resort to discuss his call with Russian ambassador Sergei Kislyak, then phoned again to provide an update. During the call with Kislyak, the Russians were persuaded not to retaliate against sanctions levelled by Barack Obama.

In another case, the charge sheet says Flynn was directed by a "very senior member" of the incoming administration in December to try persuading other countries to vote against a U.S.-sponsored resolution on Israel at the UN.

Flynn has pleaded guilty to making numerous lies about those calls.

One person weighing in Friday was James Comey. The former FBI director was fired while investigating the Flynn case. He tweeted a verse from the biblical book of Amos: "Let justice roll on like a river, righteousness like a never-failing stream."

One person not weighing in was Hillary Clinton, who refused to comment. Friday's news was a stark turn of events — given that it was at last year's Republican convention that Flynn helped popularize chants of "Lock Her Up."

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