The Government is considering a billion pound-plus sale of the country’s canals and waterways.

British Waterways, the government-controlled body responsible for 2,200 miles of canals and rivers in the UK, is running a beauty parade of banks with a view to kick-starting a strategic review in the summer. The review 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 that includes all the towpaths and land alongside the canals. 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.

Any sale of British Waterways land would attract interest from Britain’s big property developers and supermarkets.

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. It expects to appoint an adviser this summer.

The move follows Gordon Brown’s announced plan to reap billions of pounds from selling off a swath of the Government’s £337 billion of assets.

A Defra spokesman said: “Privatisation [of British Waterways] is not government policy, and that’s what we’ve said at the moment.”

British Waterways relies on Defra for annual grants to help it to maintain and restore the waterways. The public corporation has made no secret of its desire to become less dependent on Defra and seek greater commercial freedom. “At the moment we’ve told them to go and explore ways of doing that,” the Defra spokesman said.

The corporation’s most valuable regeneration scheme is a proposal, dubbed Wood Wharf, to build about 5.5 million sq ft of Docklands housing and offices next to Canary Wharf. Once built, the scheme could be worth more than £4 billlion, property sources said. British Waterways has a 50 per cent share in Wood Wharf, with the rest owned by Canary Wharf Group, the Docklands developer, and Ballymore, the housebuilder.

Speaking at British Waterways’ annual meeting last year, Robin Evans, the chief executive, said: “The continuing demand for residential units, the vibrant commercial market and the attractiveness of our waterways have combined to create proposals for a quite remarkable £6 billion, not million, billion, worth of regeneration alongside our waterways.”

Since 2000 British Waterways has received £520 million in grants, including £57.5 million so far this year. But recent grant cuts prompted a rise in mooring and licence fees.

British Waterways had an operating profit last year of only £400,000 on revenues of £190.5 million. The backlog of maintenance work on the waterways totals £119 million.

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