Tata Steel could be part-nationalised after UK Government reveals plans to buy up to 25% stake

Tata Steel has decided to put all of its British operations up for sale (PA)

Tata Steel could be part-nationalised after the Government said it was willing to put in up to 25 per cent of the amount needed to rescue the beleaguered plant and save thousands of jobs.

The package would amount to hundreds of millions of pounds of financing to prop up a potential buyer.

David Cameron has come under intense pressure to intervene since Tata Steel's Indian owners said they wanted to exit the UK business a month ago.

The UK operations were reported to be losing £1 million a day because of Chinese oversupply of steel forcing prices down to artificially low levels.

While the Government has resisted an intervention, Cameron's spokeswoman said on Thursday that the Government would likely seek a deal on commerical terms.

This could either be though debt financing, by buying bonds from the company, or equity, by buying shares in the company.

"If we were to take an equity stake it would be a minority one with the aim of supporting the purchaser in delivering long term future for the business.

"We are certainly not seeking to be controlling the company," Cameron's spokeswoman said.

She added that the Government would not consider this to be "part-nationalisation" because it would not be seeking control of the business.

Senior staff at the Port Talbot plant in Wales are said to be considering staging a "management buyout" of the company, where managers buy the business off its owners.

Other contenders for the majority stake are said to be Greybull Capital, the London-based investment firm that bought Tata's Long Products Europe division in Scunthorpe, and Sanjeev Gupta, the boss of metals trader Liberty House Group.