Business Secretary Lord Mandelson has intervened to attempt to save variety store group Woolworths

It is understood that Mandelson's office called in Woolworths' lenders – which include Burdale and GMAC - for an emergency meeting yesterday as the retailer tottered on the brink of administration.

A source familiar with the situation said the meeting reflected Government frustration that despite the taxpayer's bail-out of the banking sector, financial institutions have not been willing to extend sufficient credit to businesses.

The meeting was said to have lasted several hours but as yet, there has been no word from Woolworths' lenders about whether they will change their stance.

Mandelson's office is also understood to have contacted Barclays boss John Varley - the bank allegedly threatened not to process Woolworths' payroll this Friday - to press for a change of heart. Restructuring specialist Hilco is willing to take on Woolworths core stores division – potentially after a pre-pack administration – while the BBC could buy Woolies' stake in 2entertain, leaving Woolworths' entertainment supply division as the rump business. The banks have so far vetoed the proposals.

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