Crisis hit Northern Rock may survive as an independent group after reports of a financial lifeline.

US banking giant Citigroup is understood to be prepared to lend the bank between £5 billion and £10 billion to help ease its funding crisis, according to newspaper reports.

The exact terms of the deal are still being worked out, but the funding would enable the troubled group to stop borrowing at the Bank of England's emergency rate, which is thought to be around 7%.

It would also put the UK's fifth biggest mortgage lender on a more stable footing, and enable it to continue to operate as an independent group, thwarting the bidders that are currently circling. Despite previous attempts to stabilise the bank, it is understood that up until now no commercial lenders were prepared to deal with it.

Citigroup was originally called in to work alongside Merrill Lynch advising Northern Rock on a sale. It emerged last week that New York-based private equity firm JC Flowers had raised £15 billion to bid for the bank.