The Treasury is preparing to launch financial rescue packages for companies whose failure would “disproportionately harm the economy.”
Strategically important firms would be eligible for government bailouts on a "last resort" basis, according to a Financial Times report.
Under the new plan, named Project Birch, the Treasury would have increased capacity to handle bespoke bailouts of viable companies once all other options were exhausted.
A government spokesperson said: "We are putting in place sensible contingency planning and any such support would be on terms that protect the taxpayer."
All sectors of the economy could be eligible, not just the aviation industry as chancellor Rishi Sunak previously suggested.
This will be welcome news to the steel, aerospace and automotive industry including Jaguar Land Rover, which is reportedly in talks with the government to secure a loan of more than £1bn ($1.34bn). It is also believed that Britain's biggest steel producer, Tata Steel, has approached the Welsh and UK governments for financial help.
Options could include the government buying stakes in crucial businesses facing financial problems caused by the coronavirus pandemic but it is likely that extending loans will be the preferred option.
Former chancellor Alistair Darling, who served during the 2008 financial crisis, told the Financial Times: "Taking equity might be a good thing for the taxpayer to do.
"If you're lending money, say to an airline, it's only right the taxpayer gets its fair share of success at the end."
The bailout scheme could run alongside a taxpayer-backed £25bn sovereign wealth fund which would see government buy up shares in key businesses outside of London.