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The government is "open to the idea" of taking a "minority stake" in the rest of Tata's steel business, a source in the Department of Business has told ITV News.
It comes after Sajid Javid told the Commons that the government could look at "co-investing" with a steel buyer on "commercial terms".
Philip Hammond urged China on Saturday to "accelerate its efforts to reduce levels of steel production".
The Foreign Secretary was in Beijing where he met his Chinese counterpart, Wang Yi, to raise the issue of over-capacity in steel production.
Mr Hammond said the meeting had provided an opportunity to talk about "issues of mutual concern", as negotiations over a potential Port Talbot steelworks sale continue.
"I urged China to accelerate its efforts to reduce levels of steel production", Mr Hammond said.
"The UK's focus is on finding a long-term sustainable future for steel making at Port Talbot and across the UK, and I welcomed the potential interest of Chinese companies in investment in UK steel-making".
Mr Hammond will now fly on to Hiroshima for the G7 foreign ministers' meeting.
A steel tycoon seen as the frontrunner in any deal to buy out the stricken Tata Steel operations has said he will start a full evaluation of the business within a week as he moves ahead with plans to put in a bid.
Sanjeev Gupta, the head of Liberty House Group, said he was confident that he could turn around the loss-making business without government help, in an interview with Reuters.
However, he has said the UK government must act to ensure that power prices remained competitive.
Mr Gupta has previously also expressed hopes that he can take over the entire UK business without any job losses, potentially throwing a lifeline to around 15,000 workers employed by the group.
The Business Secretary is to visit the giant Port Talbot steelworks today as he returned from a meeting with the plant's owners at Tata Steel to press them for time to find a buyer.
Sajid Javid confirmed he was on his way to South Wales, where he is expected to meet managers and workers' representatives for the second time in a week.
Mr Javid, who has been criticized for failing to recognise the crisis engulfing the UK steel industry, also visited the plant last Friday.
He had cut short a business trip to Australia when Tata announced it was looking to sell.
Mr Javid said Tata's sale process will start by Monday, although there was no set time frame for it to be completed.
A solution for the struggling steel industry will require "investment, retraining and imaginative leadship", Labour MP Stephen Kinnock said.
Stephen Kinnock, whose Aberavon constituency includes the Port Talbot plant, met with Sanjeev Gupta, the chairman of Liberty House who has come forward to express an interest in buying the steelworks.
Gupta plans to replace blast furnaces with electric arc furnaces and Kinnock said he has fears for that transition and the size of the workforce.
Tata Steel intend to formally launch the sale by Monday, the business secretary said.
Sajid Javid met with the chairman of Tata Steel today in Mumbai as he attempts to find a solution to the collapse of the UK steel industry.
Javid said the UK government "will do everything it can to support a serious buyer in every way we can to secure a long term future of this industry".
Tata have not set a timeframe for the sales process, Javid added, but the company will allow a "reasonable amount of time".
A potential buyer for Britain's steel industry in Port Talbot believes it can save the thousands of jobs if the terms of the deal are right.
Liberty Group is interested in buying the Port Talbot steelworks from Mumbai-based Tata Steel.
Sajid Javid is meeting with Tata chairman Cyrus Mistry for discussions on the sale of the Indian company's UK steel operations tomorrow in India.
ITV News' Juliet Bremner reports:
Sajid Javid "ignored" warnings of the steel industry collapse, Labour has claimed, as negotiations over the Tata steelworks continue.
Shadow business secretary Angela Eagle said: "Labour has warned for months of the escalating crisis facing steel.
"Yet Sajid Javid ignored the warnings of the collapse of the industry - and the 40,000 jobs on the line - until he realised his own job was at risk too.
"The Tory Government has not done enough to address the unfair dumping of Chinese steel that is at the root of this crisis".
Latest ITV News reports
Executive Chairman of Liberty House, Sanjeev Gupta, says the commodity group could still walk away from the sale.
Sajid Javid told steelworkers and unions at Port Talbot that Tata Steel will allow a "reasonable amount of time" before a sale is completed.