Changes source in paragraph 1, adds govt statement in paragraphs 4-5

LONDON, Aug 12 (Reuters) - Britain has appointed FTI Consulting to advise on contingency plans for Thames Water to be placed into a special administration regime were the country's largest water utility to collapse, a government source said.

The heavily indebted and loss-making company is battling to avoid nationalisation by securing 5 billion pounds ($6.7 billion) of finance from its senior bondholders.

Thames, which said in July it had enough funds to continue operating for 12 months, needs a reset of regulations for the deal to go ahead.

The government said it would always act in the national interest.

"The company remains financially stable, but we have stepped up preparations and stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary," a government spokesperson said in an emailed statement.

FTI's appointment was first reported by Sky News.

($1 = 0.7433 pounds)

(Reporting by Sachin Ravikumar and Alistair Smout, Editing by Paul Sandle)

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