The newspaper says that banking investors have been contacted by the Government to find out whether the nationalised bank could be refloated, sold to another institution or remutualised.
Northern Rock currently owes the Government £14.6bn, but has 70 branches across the UK and holds assets in excess of £91bn.
The Times says it understands that neither RBS or Lloyds Bnakign Group would be allowed to bid for the bank thanks to their Government part ownership.
The newspaper says the Treasury has denied its claims.
