Steel crisis: Government willing to take 25pc stake in Tata's UK operation

The move will come as a huge relief to hundreds of Black Country steelworkers, raising the chances of a rescue for the ailing company which is currently losing around £1m a day.

Thousands work for Tata in South Wales and the North East, but nearly 600 people work at Tata's Steelpark in Wednesfield, with around 200 more at sites in Brierley Hill, Wednesbury and Walsall.

The equity stake is part of a package of support worth hundreds of millions of pounds that will be made available on commercial terms to potential buyers of Tata Steel, the UK and Welsh governments have announced.

The move followed another visit to Mumbai by Business Secretary Sajid Javid to meet Tata's chairman Cyrus Mistry on Tuesday where the minister said progress on the sales process had been made.

The Business Department said the financial support package will be tailored to the purchaser's strategy and financing needs.

The Government said it was also actively working with Tata Steel and the British Steel Pension Scheme's trustees to find a solution that will help minimise the impact of the £15bn scheme on a potential purchaser, and potentially separate it from the business.

Mr Javid said: "This Government is committed to supporting the steel industry to secure a long-term, viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment.

"Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see. We have already delivered on energy compensation, on tackling unfair trading practices and on procurement of British steel, and we will keep on going further to support this vital industry."

The announcement of the Government support follows the start of a formal sales process of Tata's loss-making UK assets.

In addition to the support package, the UK and Welsh governments said they will also be willing to consider additional grant funding support, for example to support the development of power plant infrastructure, energy efficiency and/or environmental protection measures, R&D and training.

The Prime Minister's official spokeswoman told a media briefing: "If we were to take an extra stake it would be a minority one with the aim of supporting the purchaser in delivering a long term future for the business, we are certainly not seeking to be controlling the company."

Asked if it was part nationalisation, she replied: "I am not sure we would accept the concept of 'part' nationalisation. We will be investing on a commercial basis. We would not see this as nationalisation. We would not be seeking to acquire a control in the business. We don't think that nationalisation is the right answer."