UK businessman David James' consortium has been confirmed as the third party in talks with MG Rover administrators.
It is hoped that new models and a 'white knight' can save Rover
Mr James is a corporate troubleshooter who was called in by the government to revive the Millennium Dome.
On Monday, Mr James had said he was withdrawing his initial plans to turn Rover into a sportscar maker.
Much speculation surrounds the future for the stricken carmaker, and in particular how likely it is to keep substantial production in the UK.
Aside from Mr James' group, administrator PricewaterhouseCoopers is in talks with two potential bidders from China.
Buyers line up
The other firms hoping to buy Rover's car and enginemaking assets are Nanjing and Shanghai Automotive Industry Corp (SAIC), which pulled out of talks with Rover in April, triggering its collapse.
Key Rover bid dates
8 April: Rover in administration after SAIC talks stall
3 May: Russians Oleg Deripaska and Nikolai Smolensky (owner of TVR) dismiss press reports of bids
8 May: Iranian carmakers withdraw interest, says Iran industry minister
13 May: PwC says it has 12 'credible' bids for parts of Rover
10 June: PwC says 630 firms have registered an interest in buying either part or all of Rover
11 July: David James said he withdraws plan needing SAIC support
13 July: Nanjing of China submits bid to PwC
14 July: SAIC-Martin Leach say they plan bid for Rover
July 15: FT reports that David James is in talks with PwC
"All of the potential buyers have an ambition to continue at least some car production in the UK , although it will take some time for any of them to get production up and running again," PWC's Tony Lomas said.
"All three are intending to acquire all of the car and engine production assets of both MG Rover and Powertrain.
"We are hopeful of concluding a deal in the near future."
SAIC has signed an agreement with former Ford of Europe chief Martin Leach to rescue MG Rover.
The bid vehicle is called Magma Holdings and involves Ed Sabisky, a former finance director of Vauxhall.
It involves a substantial amount of car making at Longbridge and a research centre for new models, which would mean jobs for 1,300 to 1,600 engineers and designers.
SAIC is expected to produce engines at a plant in China, using machinery from Longbridge.
The Nanjing bid is similar in many respects - however, it is unclear if they would use the Longbridge site to make cars. One report suggests they may choose another site in the West Midlands.
Roger Maddison, of the union Amicus, welcomed the news and said financial assistance would probably be needed.
T&G general secretary Tony Woodley added: "We have worked extremely hard before and since the collapse of Rover to resurrect an SAIC deal because that and only that will reopen Longbridge.
"With no disrespect to Nanjing, who I have no doubt are sincere about their own plan, there is a massive difference for Britain and British workers' jobs between the bids. The government and the administrators need to give the full support that's now required."
A deal which involves car production at Longbridge could also benefit creditors.