The National Audit Office is considering an inquiry into the government's dealings with the controversial owners of MG Rover in the run-up to the carmaker's collapse.
The NAO has extensive powers to audit all corners of central government and reports directly to parliament. Any study would seek to establish whether public money had been "put at risk", by the Department of Trade and Industry (DTI) or any other public body, in the months before Rover's collapse in April.
A likely focus of any scrutiny would be Tony Blair's enthusiasm to prop up Rover in its final days in the hope of a rescue deal with the Chinese carmaker Shanghai Automotive Industry Corporation.
A £100m bridging loan was offered in a move believed to be against the advice of DTI officials. The offer, backed by Mr Blair and the then trade secretary, Patricia Hewitt, came during the general election.
The demise of Britain's last volume carmaker brought 5,000 job losses at its Longbridge plant and left creditors being owed £1.4bn.
An NAO spokesman said: "At this stage we have been closely tracking what has happened." He added that a decision would be made on whether to conduct a full study in the coming weeks.
This week Alan Johnson, Ms Hewitt's successor as trade secretary, said the DTI had appointed two insolvency experts as independent inspectors leading an investigation into Rover's demise. The move was the first time the government had acknowledged that circumstances surrounding Rover's collapse suggested possible serious misconduct.
The shadow trade secretary, David Willetts, who has been urging the DTI to publish more analysis on Rover's accounts, said yesterday he would welcome an NAO report. "By addressing legitimate questions about the DTI's actions and advice, [an NAO study] could fill a potential gap in the official DTI probe," he said.
"It is important the inquiry goes back the full five years and examines the government's original decision to back Phoenix ... It should look fully at the roles of both ministers and their advisers."
