Harland & Wolff (H&W), the shipyard-owner which built the Titanic, is closing on a government-backed rescue deal with a Spanish shipping industry group.

Sky News can reveal that Navantia has won approval from Downing Street to acquire H&W’s four UK shipyards in a transaction which could be formally agreed as early as next week.

If confirmed on the expected terms, the agreement would salvage more than 1,000 British industrial manufacturing jobs.

Whitehall sources cautioned that a deal had yet to be finalised, and remained subject to change, but acknowledged that an outline agreement had now been reached.

Under the deal, they said, Navantia is expected to pay tens of millions of pounds for H&W’s assets.

It has also secured the government’s backing for a renegotiated contract held by the Belfast-based company to build three Fleet Solid Support (FSS) ships for the Royal Navy.

The precise details of the revised contract were unclear on Saturday morning, although one insider said the government and Navantia had “compromised” on a request from the Spanish company for a £300m improvement in its value.

The original deal struck by H&W, whose London-listed holding company collapsed into administration in September, was said by one government source to have been “uneconomic”.

If an announcement about a rescue deal does come before Christmas, it would represent a welcome piece of positive economic news for Sir Keir Starmer’s administration following a bruising backlash from the private sector against October’s Budget.

In recent weeks, the government has been working with City lawyers to scrutinise the revised Ministry of Defence contract and whether it would comply with European state aid rules.

H&W’s collapse into administration came after a plea for taxpayer support was rejected by ministers.

Navantia, which is already a partner of H&W on the Royal Navy contract, has been providing financing liquidity to the company on a week-by-week basis since the company’s filing for administration.

The British and Spanish governments have also been engaged in discussions about the prospective deal.

A final agreement is likely to incorporate jobs guarantees from Navantia.

H&W’s four shipyards are in Belfast; Appledore, Devon; Arnish on the Isle of Lewis; and Methil, Fife.

Bankers at Rothschild have been running a sale process to gauge interest in the company and its assets since September.

Founded 163 years ago, Harland and Wolff built the most infamous passenger ship in maritime history, with The Titanic sinking on its maiden voyage across the Atlantic in 1912.

The Department for Business and Trade and Downing Street have been contacted for comment.