If approved, the legislation would stop the Justice Department from using public funds to try the alleged mastermind of the 2001 attacks, Khaled Sheikh Mohammed, and his four co-accused, in domestic US courts.
President Barack Obama's administration has announced plans to prosecute the men in New York, just steps from Ground Zero, where the World Trade Center once stood. The attacks killed almost 3,000 people.
But the plan has been met with howls of protest from lawmakers and New York residents.
"The whole venue of New York would be a circus. When you criminalize the war you make a huge mistake," Senator Graham said.
And he told a press conference that using a "civilian trial with the 9/11 conspirators could be dangerous."
"The law enforcement model being used by the Obama administration should be rejected. We're not fighting a crime, we're fighting a war. And to criminalize this war puts our nation at risk."
He insisted the system of special military commissions, set up to try detainees at Guantanamo Bay, Cuba, was the best venue to try the alleged September 11 plotters.
Such trials could be held "quickly, securely and with very little additional cost," he said.
The White House said Sunday it was still hoping to bring Sheikh Mohammed and other alleged plotters of the September 11 attacks to trial in New York, despite reservations, including from Mayor Michael Bloomberg.
"We are talking with the authorities in New York," spokesman Robert Gibbs said. "We understand their logistical concerns and their security concerns that are involved. We have been discussing that with them."
A civilian trial in New York could cost around 200 million dollars a year, racking up a billion-dollar price tag if it extended over five years as a complex case could, according to figures cited by lawmakers on Tuesday.
Graham, who plans to meet with the White House to discuss the legislation, said he was "confident" the measure had the support to pass a vote.
Democratic Senator Jim Webb threw his backing behind the bill saying the attacks should not be prosecuted in a US civilian court.
"This is not an appropriate type of crime to be tried in an American criminal court," he said.
He also warned that Attorney General Eric Holder had yet to give "a very clear answer" on what would happen to the accused plotters of the attacks if they were acquitted by a US court.
Meanwhile, the second most senior Democrat in the House of Representatives told reporters that the White House was reassessing a decision to transfer some prisoners from Guantanamo Bay to the Thomson prison facility in Illinois.
"I think the administration realizes that this is a difficult issue," said House Majority Leader Steny Hoyer.
"And I think that they are assessing where they are and where they think we ought to be. I think that's appropriate. And I'm looking forward to discussing it with them."
On Monday, Obama requested 237 million dollars in his 2011 budget for the purchase and retrofitting of the Thomson facility, where his administration has said they plan to hold some former Guantanamo detainees.
Thomson would be upgraded to a high-security facility with space for federal prisoners and a wing under Pentagon administration for former Guantanamo prisoners.
Obama's administration has pledged to close the facility at Guantanamo Bay, located on US naval base on Cuba's southern tip. There are 192 detainees still being held at the prison.
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