£1bn canal sell-off in pipeline

While the waterways would remain, any sale could place the future of towpaths and land alongside canals into doubt.

Property developers and supermarkets are believed to be interested in buying up parcels of land along the waterways. The sale would involve British Waterways, the Government-controlled body responsible for 2,200 miles of canals and rivers in the UK.

The Government is reported to be planning a strategic review in the summer, which will examine all options for the business, including a sale of all or parts of the portfolio, a possible stock market listing or other partnership or funding structures.

A sale could raise as much as £1 billion for the Treasury.

British Waterways is sitting on a property goldmine.

The company last valued its portfolio at more than £500 million, but that figure could more than double over the coming years as it shares the spoils of housing and office regeneration schemes on its land.

It is understood that British Waterways, which falls under the remit of the Department for Environment, Food and Rural Affairs (Defra), has written to several banks, including Rothschild, JPMorgan and Morgan Stanley, seeking proposals for the review.

The move follows the announcement of Gordon Brown's plan to reap billions of pounds from selling off a swathe of the Government's £337bn of assets.

British Waterways relies on Defra for annual grants to help it to maintain and restore the waterways. It has made no secret of its desire to become less dependent on Defra and seek greater commercial freedom.

Development of the canal network in central Birmingham and at Brierley Hill and Walsall show the potential for making money through new homes, shops, bars and restaurants.