"Britain's five leading high street banks have as much as 95.3 billion pounds (USD 175 billion) of distressed assets on their books that may qualify for the American bailout scheme," The Times reported.
If the British banks tap into the bailout package to the maximum, they could secure one quarter of the USD 700-billion being made available, the The Times reported.
"Under the terms of an outline agreement that appeared to have been reached by US policymakers last night, Britain's lenders will be able to use the facility," the report added.
The securities together held by the five British lenders can be transfered to a federally-backed Treasury fund.
The Times said under the proposed terms of bailout package, non-US financial institutions must have significant operations in America to qualify.
Attributing to analysts' estimates and the banks' own recent filings, the report said HSBC had as much as 45 billion pounds in structured mortgage debt and other soured assets sitting on its balance sheet that it might look to exchange with the Fed under the plan.
"Next are Barclays, with 17.4 billion pounds, Royal Bank of Scotland with 16.2 billion pounds and HBOS with 13.3 billion pounds," the report said quoting analysts.
Lloyds TSB, which agreed to buy HBOS for 12.2 billion pounds last week, stands some way behind in its exposure to the troubled mortgage securities, with assets of about 3.4 billion pounds, the report added.