The fate of Northern Rock could be decided within days after the Government told bidders that it wanted to make an announcement “soon after this weekend”.

It is understood that Gordon Brown wants to be able to choose a winner for the stricken bank by Monday, when Parliament returns from a week-long recess.

The Times has learnt that the “tripartite” of the Treasury, the Bank of England and the Financial Services Authority has come under pressure from the European Commission to reach a conclusion as soon as possible.

The Commission is the key, because it will decide whether or not the Government has contravened state aid rules by guaranteeing Northern Rock's £26 billion debt pile.

“The Commission is putting pressure on the Government because of the state aid issue,” one source said last night. “That's why they're having to accelerate the process.”

It is believed that the tripartite is scheduled to meet members of the Commission this week, while bidders have been told to submit their final proposals to the Government by the weekend.

It is understood that the proposal by Sir Richard Branson's Virgin proposal is the favoured option, although the Treasury is still giving consideration to a rescue plan put forward by Northern Rock's management, led by Paul Thompson, a former insurance executive.

One source said: “There's no question that the Government is keen to get the very best deal for the taxpayer and negotiations are ongoing, but there's not a tremendous amount of room for manoeuvre.”

Another source said: “It is all negotiating tactics to try and position everybody, but there are only so many times you can change the plan before it starts to make no sense.”

Alistair Darling, the Chancellor, has said that the Government's preferred option is a private sector sale but that nationalisation cannot be ruled out, although sources have said that Mr Brown wants to avoid taking the Rock public at any cost. A Treasury spokesman said last night: “Nationalisation remains an option and there's work ongoing at the Treasury to make sure it remains a credible option.”

However, many see nationalisation as a stick being used by the Government to beat rebel shareholders - including RAB Capital and SRM Global - to force them to back Virgin rather than the Rock's management.

The shareholders have rejected Sir Richard on the ground that his proposal would dilute hugely their investment while enriching Virgin. Yesterday, in a further show of defiance, SRM raised its stake in Northern Rock to 11.5 per cent.

By dangling the threat of nationalisation over the shareholders' heads, the Government is making clear that unless RAB and SRM vote in line with its wishes, their entire holding will be wiped out.

One source close to Virgin said last night: “If it's a choice between us and nationalisation, they'll chose us.”

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