Whitehall is thought to be lining up a Turkish backup bid for British Steel in case its sale to Chinese firm Jingye fails.
Officials are holding talks with Turkish conglomerate Cengiz Holdings, according to the Guardian newspaper.
The government insisted it was confident the £50m deal with Jingye would go through.
However, a spokesperson refused to deny the claims that Cengiz was waiting in the wings.
Cengiz was founded by Mehmet Cengiz, who is an ally of Turkish President Recep Tayyip Erdogan.
The Turkish government has handed Cengiz a number of major infrastructure projects in recent years.
These include Istanbul’s new airport, a high-speed rail project and the Black Sea coastal highway.
Civil servants have been trying to find a buyer for the UK’s second-biggest steel maker since it went into liquidation in May 2019.
British Steel employs about 4,000 people in Scunthorpe, where it’s main steelworks are.
The Chinese firm was chosen as the preferred bidder in November last year.
This meant it entered exclusive talks with the official receiver, the government official managing the deal.
However, trade unions have since aired their concerns about the prospect of job cuts at the Scunthorpe plant.
Jingye is led by the former Communist party official Li Ganpo, who is one of China’s richest men.
Despite the exclusivity agreement with the official receiver, the Department for Business, Energy and Industrial Strategy (BEIS) is allowed to talk to other firms.
Officials are thought to have both Cengiz and Liberty Steel on standby in case the Chinese bid falls through.
A BEIS spokesperson said: “Officials have met and continue to meet all parties interested in acquiring British Steel as the government is not party to the exclusivity agreement signed by the bidder and the official receiver.
“The government believes the Jingye transaction will complete in the coming weeks.”