#2 will work? Yes. #2 will work, but since you're anchoring the time with "today" at the beginning, you don't need to shift all those time references.
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Anonymous1) Today Tom said, "I was driving yesterday about this time." How can I rephrase #1 into reported speech?2) Today Tom said that he had been driving the day before about that time.#2 will work?Yes. #2 will work, but since you're anchoring the time with "today" at the beginning, you don't need to shift all those time references. Note the difference: