Alistair Darling is hoping Northern Rock’s future can be decided before Christmas, as his officials encourage the troubled bank to look beyond Virgin, its preferred bidder, at rival offers. Financial Times, Sunday Times, Independent on Sunday

The chancellor expects a bidding war to break out in the coming days, which he believes will help him secure the best possible outcome for the taxpayer, currently backing loans of more than £22bn to the bank.

Last week it seemed the contest was over after Northern Rock selected a consortium led by Virgin as preferred bidder.

However, in the past three days, the stakes have been raised, as it emerged that Cerberus, the private equity group, submitted a revised proposal on Friday, as did private equity group JC Flowers.

It is understood Mr Darling now deems the revised JC Flowers offer an “approved bid”, because it meets the Treasury’s principles for the sale, aimed at recovering the huge public loan advanced to Northern Rock.

Luqman Arnold, the former Abbey chief executive, will this week present detailed proposals for his bid and wants to inject new management, raise about £600m in new finance and take a stake of about 15% in the bank.