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The Department of Trade and Industry was expected yesterday to open bidding for the ownership of the Royal observatories to the private sector.

Both the Royal Greenwich Observatory and the Royal Observatory Edinburgh are owned by the Particle Physics and Astronomy Research Council. The two work closely with Cambridge and Edinburgh universities.

Under Treasury guidelines "privatisation" of research council facilities can include ownership by universities. Both Cambridge and Edinburgh are showing interest in making a bid. But sources say more work is needed to assess financial implications and liabilities.

The management of the Royal Observatory Edinburgh is also making moves that could lead to a management buy-out.

The DTI announcement follows the Government's "prior options" initiative, which is looking into the possibility of privatising research council facilities. It is also expected to announce that the management of PPARCs observatories in Hawaii and La Palma in the Canary Islands should be contracted out, although the council would retain ownership of the assets.

Much of the work for the Royal Observatories relates to the design and supply of state-of-the-art instrumentation to the overseas telescopes. The business is worth millions of pounds a year to the observatories.