Government ministers are keen to return the troubled lender to the private sector, preferably at a profit, before the next general election with an outright sale preferred to floatation because it will be quicker, the newspaper added.
In order to attract potential buyers, the Treasury plans to split the bank's good and bad assets, with some of the most toxic assets likely to stay in public ownership. The Times said Northern Rock currently has deposits of Â£19.5 billion, with a mortgage book worth around Â£66.7 billion.
However, ministers may have to wait for the European Commission to clear any division of good and bad assets, as this may constitute an unacceptable level of state aid, the publication noted.
Other potential suitors are believed to include Sir Richard Branson's Virgin Group and a number of private equity funds.
Northern Rock was nationalized in February 2008.