The Newcastle-based bank is Britain's most prominent casualty of the global credit market turmoil, which has also weighed on other mortgage lenders, such as Alliance & Leicester and Bradford & Bingley.
Northern Rock's advisers expect to attract interest from eight to 10 parties, banking sources say.
The Times said U.S. private equity firm Cerberus had dropped plans to table a bid for Northern Rock, dealing another blow to the embattled bank.
"I firmly agree that a sale is the wrong thing. The situation is a shambles and probably managing the business for a turnaround rather than a sale right now is the right way forward, given the bids on the table are probably below 1 pound (per share)," said Mike Trippitt, analyst at Oriel Securities.
"The problem right now is with the level of retail deposits that have walked out the door and the emergency funding, it becomes less and less attractive," he added.
Northern Rock is estimated to have borrowed about 25 billion pounds from the Bank of England since it was forced to turn to it for funds in mid-September after being unable to raise finances in wholesale markets.
Britain's Treasury said on Monday it would be partial to bids that minimised government involvement, and any buyers should not just assume that a loan agreement with the Bank of England would be available beyond a sale or when the credit line expired.
"No one knows which way it is going to go. No one knows whether it is going to be broken up, whether it is going to be privatised, whether it is going to be taken over," said Mark Priest, a trader at TradIndex.
"Uncertainties in these conditions are just going to make this stock worse and worse and worse. We also have UBS and Swiss Re in Switzerland going limit down today. This banking sector is walking on a knife edge."
Shares in midcap British buy-to-let lender Paragon tumbled 40 percent after it said it may need to raise 280 million pounds from shareholders due to problems raising finances.
