The secretary of state would, of course, consider any realistic offers which the administrator put to him

Department of Transport

Transport Secretary Stephen Byers and Chancellor Gordon Brown have received a letter from the state-owned bank, according to a report in The Financial Times.

Quoting government sources, the FT says the bank sets out the financial options for taking over Britain's 23,000 miles of track and 2,500 stations.

The government has told the BBC it would not rule out a "realistic offer" for Railtrack.

But a spokesman declined to comment on whether a formal approach had been received.

He said any offer would have to be a better option than the not-for-profit trust proposed by Mr Byers as a replacement for Railtrack.

Way out

"The secretary of State Mr Byers would have to approve any transfer of the company out of administration," he said.

"The secretary of state would, of course, consider any realistic offers which the administrator put to him.

"The company Limited by guarantee proposed by the Secretary of State covers the company's previous and future liabilities.

All other proposals would have to be at least as good."

Selling Railtrack would offer a convenient way out of an increasingly embarrassing situation for the government, as threats of legal action over the collapse of Railtrack mount.

WestLB is understood to have made a previous approach for the company, when it was still solvent.

Preliminary talks are also believed to have been held with Barclays and Citigroup.

Upping the stakes

Earlier Railtrack upped the stakes in its battle to reclaim assets frozen when it went into administration.

It warned ministers that its parent company Railtrack Group would collapse unless the government stuck to an earlier deal to give it ownership of the Channel Tunnel Rail Link.

Railtrack Group says the high-speed line between London and the channel tunnel is the group's most valuable asset apart from the national railway network, and is worth about �400m, or 75p per share, for investors.

Chairman John Robinson said: "If these issues are not resolved immediately, the financial solvency of Railtrack Group will be imperilled with profoundly damaging consequences for Railtrack's shareholders."

At a stroke, Labour has put at risk the trust of the private sector. They have imperilled the billions of pounds in private sector finance needed to reform and repair Britain's crumbling public services

Michael Howard, shadow chancellor

City backlash

Meanwhile Railtrack shareholders in the City have swung in behind the Railtrack group's board of directors, giving full backing to their efforts to secure a fair payment for shareholders.

They have written to the government warning of possible legal action over the decision to put the company into administration.

Loss of confidence

Shadow chancellor Michael Howard said: "At a stroke, Labour has put at risk the trust of the private sector.

"They have imperilled the billions of pounds in private sector finance needed to reform and repair Britain's crumbling public services.

"Capital markets are now learning that they cannot trust the government."

The government has already agreed to give Railtrack access to �370m in assets frozen by the company's bank as part of the administration process, to compensate shareholders.