A new law that could retrospectively block foreign acquisitions of key British businesses is being considered by the Government.
The draft legislature could also give powers to tackle deals which have already been sealed, meaning past agreements could be unwound as ministers try to safeguard critical companies in areas such as defence and infrastructure.
The National Security and Investment Bill which could be published as soon as this month may include powers allowing the officials to intervene in foreign takeovers of companies deemed to affect national security, Bloomberg reported.
The development comes after concerns over Chinese telecoms firm Huawei’s role in setting up Britain’s 5G network.
Ministers ordered telecoms operators to remove all Huawei equipment from the UK's 5G networks by 2027.
The decision came after the Trump administration accused Huawei of having a close relationship with the Chinese government and army, claiming its equipment could create a security risk.
Chinese funding to help build the new Hinkley C nuclear power station in Somerset also raised concerns but the project has gone ahead.
Sketching out its plans to protect the UK last year, the Government said it would strengthen controls by “adding conditions to a transaction or blocking the transaction as a last resort”.
Although the exact proposals to be brought before Parliament for a vote have not been agreed, according to Bloomberg they may be used to target one particular deal, although this is not certain. Parts of the Bill are also thought to be aimed at strengthening protection for intellectual property and academic partnerships
A government spokesman told Bloomberg: “The Bill will be brought forward when parliamentary time allows and remains a priority for the government’s agenda.”