Ministers had committed £100 million to the project in January, which it said would help unlock further support from private investors.
The factory was expected to create 3,000 direct highly-skilled jobs and another 5,000 indirect jobs in the wider supply chain, and had been touted as an example of ‘levelling up’.
However, it is understood after struggling to find investors to help fund the construction, Britishvolt wanted to draw down nearly a third of the funding early but the Government refused.
It has left the £3.8 billion project, which has already been delayed several times, in doubt.
Ian Lavery, the Labour MP for Wansbeck, where the site is based, told the BBC he had spoken to the chairman of Britishvolt on Monday who said the company asked the Government for £30m for the project to continue.
He said: “The chairman informs me that the government have replied overnight with Grant Shapps the new business secretary, saying that they are not prepared to do that and as a consequence it very likely that Britishvolt will go into administration.”
Lavery added: “It is fairly and squarely at the door of the Government for basically not agreeing to bring monies forward which will ensure that this project will continue. It is absolutely outrageous – what happened to levelling up?”
A spokesperson said the Government would not comment on “speculation or the commercial affairs of private companies”.
A Britishvolt spokesman said the company was “aware of market speculation” and was “actively working on several potential scenarios that offer the required stability”.
“We have no further comment at this time,” he added.