British Steel is to enter into a rescue agreement with China's Jingye Group, which can safeguard up to 4,000 jobs in the United Kingdom.
Jingye Group has agreed in principle to buy British Steel for £ 70m.
It is understood that the government will help in the form of loan guarantees and other financial support.
British Steel has been in operation by the government since May when the company went into liquidation.
In addition to employing 4,000 people at Scunthorpe and Teesside, British Steel supports an additional 20,000 jobs in the supply chain.
It is believed that although Jingye Group has promised to increase production, it has also warned that costs may be needed.
The Chinese group aims to increase production at Scunthorpe from 2.5 million tonnes per year to more than three million.
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Since May, the company has been run at a loss by the official recipient ̵[ads1]1; in fact, a private government agency.
British Steel's former owners, Greybull Capital, went away and said that Brexit concerns had decimated future order books.
British Steel had been in rescue talks with Ataer, a subsidiary of Turkey's state military pension scheme Oyak.
Ataer had signed a signed preliminary agreement to buy the company in August.  However, hopes that the deal could be completed faded last month when the official recipient of British Steel said the parties had not agreed terms.
The British industry has struggled for several years in the middle of claims that China has flooded the cheap steel market.
It prompted US President Donald Trump to impose a 25% import duty on steel imports from, among other things China and the EU.
Jingye has 23,500 employees, as well as the main production of steel and iron. businesses, it is also involved in hotels, tourism and real estate.
The majority of British Steel workers are employed at the Scunthorpe plant.
Jingye's chairman Li Ganpo recently visited British Steel's websites and met Scunthorpe MP Nic Dakin and Andrew Percy, representative of the Brigg and Goole constituencies.
Percy told the Grimsby Telegraph that he had received assurances about the company's future.
"They have assured us that if they make progress on this acquisition, they have every intention of investing to expand production to serve the UK and European market," he said.