Bermuda is among a list of offshore low-tax jurisdictions that Britain could be forced to bail out, as detailed in early drafts of a Treasury report, due to the economic crisis impacting the territories' finances.

That is according to UK paper The Guardian, which revealed that Michael Foot, chairman of UK-based Promontory Financial Group, who carried out an independent investigation of the Island's finances in March as part of a wider review of British Crown Dependencies and Overseas Territories business jurisdictions, will set out a number of options to Britain's government ministers in the report as fears grow within Whitehall over the state of the nation's overseas territories and crown dependencies.

Insiders told the paper that Mr. Foot's findings suggest the government may need to make provisions for the financial failure of its "tax havens", with experts saying the collapse of one such major jurisdiction could potentially cost the UK tens, if not hundreds of millions of pounds.

The Guardian reported that government officials were aware that some British overseas territories were facing serious problems which could get worse, while Whitehall sources have warned the could become failed states and dragged into the illegal drugs trade in the event of further economic deterioration.

Earlier this month, fellow British Overseas Territory the Cayman Islands was forced to ask the UK's Foreign Office permission to borrow £278 million to repair its huge deficits, but its request was refused and its authorities were advised to raise the money through property or payroll taxes, with talks still ongoing over a £30 million emergency loan package.

The paper said any suggestion that Britain would have to rescue offshore financial centres would be extremely controversial as they "drain the UK economy of an estimated £25 billion annually through their role in aggressive tax avoidance and evasion".

Vince Cable, the Liberal Democrat Treasury spokesman, said: "Britain obviously has some responsibility towards these small number of territories and that's clearly right, but we can't get into an open-ended bailout that would reward financial mismanagement.

"It would be extraordinary to bail out these tax havens, especially as additional money that went to them would come out of aid budgets to the detriment of poorer countries that have managed themselves properly."

The Foot report is likely to suggest that tax havens should boost their balance sheets with new taxes, though this would have to be carefully handled as it could drive away valuable businesses, The Guardian claimed.

But the paper said that Mr. Foot will say that tax havens will require additional cash to meet new international protocols, however some do not have the expertise or staff to deal with the economic crisis.

It added that he was thought to be concerned about the accuracy of some of the islands' economic analysis and modelling.

Sources close to Mr. Foot, the paper said, suggest he was particularly worried that tourism in the Caribbean islands was also suffering, which is compounding the downturn.

Meanwhile the UK Treasury has insisted that it was not in "the business of bailing out tax havens", while Foreign Office officials said overseas territories were responsible for their own finances, said The Guardian.

This is despite Britain imposing direct rule and suspending the Caribbean Turks & Caicos islands' government amid claims of systemic corruption there.