Lehman Brothers was tonight scrambling to secure a buyer after a week in which confidence in the bank has spiralled lower at a breathtaking pace.

Officials at the Federal Reserve and US Treasury have been working with Lehman and are hoping to get a deal in place by the opening of the Asian markets on Monday, to prevent a worsening financial crisis.

Barclays is thought to be interested although it is not clear whether it is eyeing parts or all of the troubled Wall Street firm. Bob Diamond, the Barclays president had been in the US on Monday, coincidentally at a conference hosted by Lehman, and was rumoured to have returned to New York late this week.

Other potential buyers include Bank of America, said to be working alongside the investment firm JC Flowers and the Chinese sovereign wealth fund, China Investment Co.

Nomura has also been named as a possible bidder, as have a number of private equity firms. None would comment.

But Wall Street was not convinced that a deal could be done, fearing that potential buyers would be wary of finding as yet uncovered problems in the Lehman balance sheet. Shares in the bank, which have fallen dramatically this week, were trading lower again today, down another 43 cents to $3.79.

There were suggestions that buyers would only move forward with the kind of guarantees offered by the Federal Reserve to JP Morgan when it bought Bear Stearns in March and agreed to absorb up to $29bn (£16bn) of losses.

Treasury secretary Hank Paulson is, though, said to be adamant that further taxpayers' money will not be used.

The turmoil at Lehman is the latest in the unravelling credit crisis that began over a year ago. Far from abating, the situation appears to be getting worse, with the US government forced to step in and bailout the mortgage finance firms Freddie Mac and Fannie Mae last weekend. There has been pressure on the shares of both Merrill Lynch and Washington Mutual this week.

It is unclear how much so called counter-party risk is carried at Lehman - that is, how much does it owe to other banks and to whom, and therefore how much of a risk it would pose if allowed to go under.

Senator Richard Shelby, a Republican who chairs the senate banking, housing and urban affairs committee said the government was under no obligation to rescue Lehman. "They are not too big to fail. I don't see this as a national problem. I see this as their problem," he said.

Diamond has made no secret of his plans to boost Barclays' position on Wall Street but in the past stressed his preference for organic growth.

Among the talk on Wall Street today were suggestions that a consortium could take Lehman private, recreating an old fashioned partnership.

A partial break-up, already proposed by existing management, is also possible. Barclays is keen to expand its asset management operation and could potentially be interested in the highly-regarded Lehman fund management division already on the block.

But the Fed might be even more reluctant to provide any support to a foreign buyer and Barclays would also need to convince its own shareholders that taking part of the investment bank was not too risky in the current climate.

Lehman ran into trouble after expanding aggressively into financing commercial and residential property, including sub-prime mortgages.

As the credit crunch began to emerge last year, the bank insisted that it would be able to get through the crisis. The market appeared to believe it, and its shares were still at $66 in February.

The failure of Bear Stearns in March however unnerved Wall Street and confidence in Lehman began to erode. The bank registered losses of $2.8bn in the second quarter and a further $3.9bn in the third, after taking huge writedowns on its property investments.

Lehman employs around 25,000 people worldwide.

Lehman had attempted to calm the markets on Wednesday with a series of measures to cut its exposure to the property market and raising fresh capital. But Wall Street was not convinced, forcing chief executive Richard Fuld to search for a buyer.