Figures involved in a rival bid for the Telegraph are drawing up legal action against the government, after ministers gave the owner of the Daily Mail permission to take a significant step towards clinching its £500m takeover.

The Telegraph titles, which include the daily and Sunday editions, have been in limbo for three years after previous owners, the Barclay family, lost control of them over huge unpaid debts.

Last week, Lisa Nandy, the culture secretary, lifted restrictions that had stopped Daily Mail and General Trust (DMGT), the company controlled by the Daily Mail owner Lord Rothermere, from acquiring the option to buy the Telegraph.

Being able to own the option would mark the latest step in its attempt to finally wrest control of the titles.

The option is currently held by RedBird IMI, the Abu Dhabi-backed venture that has been forced to sell the Telegraph titles after a change in the law preventing such a degree of overseas state ownership of a newspaper group.

However, it is understood that figures involved in a rival bid for the Telegraph led by Dovid Efune, the British owner of the New York Sun, are now examining a potential judicial review of the government’s decision to allow the option to be transferred.

They are concerned that the decision risks prejudicing the outcome of months of regulatory investigations over the Telegraph’s sale to Rothermere’s group. Regulators are examining the deal’s impact on media plurality and competition.

It is understood there is also concern that, should Rothermere’s bid be blocked, having the option on the Telegraph’s ownership would effectively put it in charge of selling it on, giving DMGT control over which rival bids are accepted.

A spokesperson for the consortium did not comment.

DMGT struck a deal to buy the Telegraph titles in November, entering a period of exclusivity with RedBird IMI.

Critics of the deal also raised concerns over a move by DMGT last October to “sell” the group’s lucrative events business, which does much of its work in Qatar and Saudi Arabia, to a new offshore parent company, Rothermere Continuation Holdings Ltd.

However, the reorganisation came before the Telegraph came back on the market.

DMGT said there would be no state funding in its Telegraph deal. Laws limiting state ownership are designed to stop overseas states being able “directly or indirectly, to control or influence the policy of UK newspapers”.

Last week, Axel Springer, the owner of Politico and Bild, joined Efune’s rival consortium. Also involved are the Baltimore Sun owner, David D Smith, and the British investor Jeremy Hosking.

Rothermere’s DMGT is planning to complete the £500m deal with borrowing. The figure was widely seen as a high price, but was demanded by RedBird IMI, which wanted to recoup what it paid for the group.

Nandy has raised concerns about further consolidation of “right-leaning” titles and the risk that the Mail and Telegraph could adopt aligned editorial positions. While DMGT disputed the characterisation of its newspapers as “right wing”, arguing the term was vague, regulator Ofcom will examine the deal’s impact on media plurality.

Both the Department for Digital, Culture, Media and Sport, and DMGT declined to comment.