The decision by the Passport Agency was disclosed in leaked Home Office minutes. It was reportedly prompted by the Government's drive to privatise Whitehall work and cut costs.
The confidential documents are understood to reveal that ministers also plan to invite travel trade companies, financial organisations and post offices to take over the issuing of full passports and process application forms.
The decision was made, according to the minutes, because there was a 'projected increase in demand and no extra finance available'.
For the last six months the future of the popular temporary passport has been under Home Office review, but no decision is expected on its future until discussions are completed later this year.
The review, at least partially prompted by threats from Spain to stop recognising the BVP from 1995, sought the opinion of experts in the travel trade about the future of the one-year passport which gains entry to most west European countries for a three-month period. Two-fifths of its holders travel to Spain.
Millions of holidaymakers pick up the passport from post offices at the last minute. It costs pounds 12 and is available on proof of identity.
As such it is far more convenient than the full 10-year passport which costs pounds 18, requires a counter-signature from a JP or doctor, and takes about four weeks to issue.
However, last night a Home Office spokesman would say only that the BVP's future was under review.