British Energy has been struggling with debt

Losses are the company are spiralling skyward after it slashed the valuation of its power plants, and in the year to March it dived �4.3bn into the red compared with a loss of �493m one year earlier.

After a rescue loan of almost �600m was granted by the government - although most of that has to wait for European Commission approval - the company has failed to conclude its restructuring.

Now, the Sunday Times and Sunday Telegraph say, 30 September is the end of the line.

If the group and its creditors cannot reach agreement by then, they say, administration is the only way forward, followed by a return to public ownership so that its nuclear power stations remain safe.

But British Energy pointed out that its original deal with the government gives it till 30 September 2004 to conclude the restructuring.

The deadline in three weeks, it said, is its own target, rather than a binding part of the deal.

Recent changes in the law mean a prohibition on government ownership of BE, imposed by Margaret Thatcher when she privatised the electricity industry in the 1980s, has now been repealed.

An outline agreement between BE and its creditors was reached in February, but the details are still causing trouble.

Part of the continuing argument revolves around exactly how much of the company will go to the bond-holders, who have more than 80% of BE's �480m debt, and what small fraction current shareholders will retain.

The company's financial crisis was triggered by rising debts and a slump in electricity prices following a liberalisation of the wholesale power market last year.