The BBC reported that Eshagh Jahangiri, Iran’s industry minister, had said in an Iranian press interviews that MG Rover's sale to China of the rights to its 25 and 75 models meant it was no longer attractive.
"Iran has cancelled its interest in buying Rover," he reportedly told the Donya-ye Eqtesad newspaper.
The BBC said administrators at PricewaterhouseCoopers (PwC) are still trying to see if a bid for the whole firm can be accepted, although they have had 350 expressions of interest for parts of the firm.
Three Iranian carmakers - Saipa, Khodro, and Dastaan – had been thought to be possible bidders and a spokesman for the Iranian embassy in London told the BBC that the government firm Khodro had "expressed an interest" in Rover.
"We are studying the possibility for Khodro to take over Rover and its factory in the UK," a spokesman from the economic section of the Iranian embassy in London reportedly said at the time.
But yesterday, the BBC added, Jahangiri said the deal was off.