The offer comes as MG Rover denies reports it would run out of cash by Friday.
The loan would keep the troubled manufacturer afloat long enough to finalize deals with Shanghai Automotive Industry Corporation.
Government officials are currently in China for talks with SAIC on a £1bn investment in MG Rover.
The Financial Times said discussions had so far proved inconclusive.
UK trade secretary Patricia Hewitt has said that talks between Birmingham-based MG Rover and China's biggest carmaker were the "only hope" for the UK firm.
Rover said it would not comment specifically on its own financial position but it denied that receivers would be appointed on Friday if the bridging loan was not secured.
"Clearly the discussions going on in Shanghai are very important and we will wait for the outcome," said a Rover spokesman.
The Observer newspaper reported on Sunday that an outline deal with SAIC had been ready for weeks but had not been signed because the Chinese firm feared MG Rover could soon go bust, leaving it to shoulder pensions liabilities. It put the shortfall at £400m.
The paper quoted an adviser to SAIC as saying a new loan "may give everyone more time to negotiate the deal" but "if, as seems likely, Rover is close to insolvency, it does not mean the deal will be done".
The Financial Times said the loan had been approved by Prime Minister Tony Blair and Chancellor Gordon Brown, though Department of Trade and Industry officials insisted it had not yet been formally agreed.
Under the proposed deal, the Chinese firm would invest in MG Rover to help it develop new models; in return it would secure rights to Rover's more advanced technology.