Sky News understands officials at the Department for Culture, Media and Sport (DCMS) are examining whether to impose a hold-separate order as part of the increasingly complex battle for control of the broadsheet title.

Sources close to the situation said a hold-separate order could be issued alongside a public interest intervention notice (PIIN), which the culture secretary has said she is minded to publish in order to scrutinise a takeover bid from an Abu Dhabi-based fund.

The order would also prevent the conversion of loans funded by RedBird IMI into equity in the Telegraph papers.

A PIIN is expected to be launched this week - triggering an inquiry by Ofcom and the Competition and Markets Authority - to examine a contentious plan for RedBird IMI to gain control of the Telegraph and Spectator magazine.

Lloyds, which is owed £1.16bn by the Barclay family, had indicated it will give the government 48 hours notice of the loan being repaid, with a repayment deadline imposed on the Telegraph's former proprietors of this Friday.

The date is significant because a British Virgin Islands court hearing is scheduled to take place on Monday to liquidate a key Barclay family company linked to the Telegraph's ownership.

A hold-separate order would prevent the Barclays from exerting control over the Telegraph during the period before RedBird IMI's loans convert to equity and ownership of the newspapers.

The government has not yet formally decided to publish a hold-separate order, although it is said to be seriously considering doing so.

Lloyds Banking Group has already pledged to retain the independent board brought in to oversee the sale of the Telegraph during a government probe into its prospective purchase by RedBird IMI.

Lloyds wrote to government officials on Thursday to say it would support the retention of a trio of independent directors while a public interest inquiry is carried out.

The bank's intervention has the backing of both the Barclay family and RedBird IMI, Sky News reported last week.

Ms Frazer has said she is minded to issue a PIIN amid concerns - including warnings from rival bidders - about possible editorial interference in the Telegraph's journalism.

Last Friday, Jeff Zucker, the former CNN president who Sky News revealed last week was spearheading the deal, told the Financial Times that competing bidders were "slinging mud".

"There's a reason that people are slinging mud and throwing darts - [it's] because they want to own these assets," he told the newspaper.

"And they have their own media assets to try to hurt us."

Read more from Sky News:
Wilko boss explains chain's collapse
Millions 'will struggle to afford Christmas'
Bank of England 'should have its remit pruned'

The battle for control of The Daily Telegraph has rapidly turned into a complex commercial and political row which has raised tensions between the Department for Culture, Media and Sport and the Foreign Office.

RedBird IMI has offered to repay the £1.16bn debt owed by the Barclay family to Lloyds, with £600m of that secured against the media assets.

The balance of the loan would remain as debt secured against other Barclay family assets including Very Group, the online retailer.

The Barclay family had initially sought to argue that a PIIN would be unnecessary because its deal with third-party investors involved a straightforward repayment of debt rather than a change of ownership.

Prospective bidders led by the hedge fund billionaire and GB News shareholder Sir Paul Marshall have also been agitating for the launch of a PIIN.

RedBird IMI includes funding from Sheikh Mansour bin Zayed Al Nahyan, a member of Abu Dhabi's royal family and owner of Manchester City.

Sky News revealed last week that Ed Richards, the former boss of media regulator Ofcom, is acting as a lobbyist for RedBird IMI through Flint Global, which was co-founded by Sir Simnon Fraser, former Foreign Office permanent secretary.

The Telegraph auction, which has drawn interest from the Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, has now been paused until next month.

The original bid deadline had been shifted from 28 November to 10 December to take account of the possibility that Lloyds could be repaid in full by the Barclay family ahead of the December 1 deadline.

Sky News reported earlier that the Barclays had now agreed not to contest the liquidation if they do not repay the loans by 1 December.

The Barclays have made a series of increased offers in recent months to head off an auction of the newspapers they bought nearly 20 years ago, raising its proposal last month to £1bn.

Until June, the newspapers were chaired by Aidan Barclay - the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph in 2004.

Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank's rescue during the 2008 banking crisis.

A DCMS spokesman declined to comment.