The reported proposal comes ahead of a planned G7 summit that US President Donald Trump hopes to host next month.
Britain has allowed the Chinese global leader in 5G technology to build up to 35 percent of the infrastructure necessary to roll out its new speedy data network.
But Prime Minister Boris Johnson was reported by The Telegraph newspaper last week to have instructed officials to draw up plans to cut Huawei out of the network by 2023 as relations with China sour.
Now, The Times reports Britain is proposing a “D10” club of democratic partners that would include the G7 nations, Australia, South Korea and India.
It said one of the options involved channelling investments into existing telecommunication companies within the 10 member states.
Johnson’s office issued no immediate comment on the report.
Finland’s Nokia and Sweden’s Ericsson are Europe’s only current alternative options for supplying 5G equipment such as antennas and relay masts.
“We need new entrants to the market,” a UK government source told The Times.
“That was the reason we ended up having to go along with Huawei at the time.”
Johnson’s decision this year to include Huawei angered Washington because it believes that the private Chinese company can either spy on Western communications or simply shut down the UK network under orders from Beijing.
But his reported plan to eventually cut Huawei out of the network could significantly complicate London’s relations with China just as Johnson seeks new trade partners following Britain’s exit from the EU.
Johnson challenged his US critics in January to come up with an alternative to Huawei if they did not want Britain to use the Chinese firm.