(7:30 a.m. EST) -- The QE2 could be on her way back to London, moored opposite the O2 Arena in east London – not sold as scrap, according to recent newspaper reports.

The iconic ship, which has been languishing in Dubai's Port Rashid for the past four years, could still become a floating five-star hotel, according to the consortium QE2 London which has raised sufficient funds -- £20m -- to return her to the U.K.

Recent reports have claimed the owners of the ship -- Dubai-based Istithmar -- had sold the 70,391-ton, 1,791-passenger ship to the Chinese for £20m to be scrapped. Just before Christmas a 20-man Chinese crew replaced a crew of around 40 who had been maintaining the QE2 in Port Rashid for the last four years. Roger Murray, of QE2 London told Cruise Critic: “She is still in Dubai, with a Chinese crew onboard. Officially there is still no deal [with the Chinese]. The money is there to bring her back, and there is still a chance for her to end up in London ... if we get planning permission from the Port of London Authority.”

QE2 London -- a subsidiary company of Out of Time Concepts -- has the backing of both the Mayor of London Boris Johnson and the Chancellor George Osborne. According to Murray, the deal with Dubai was almost completed, but was delayed by the P.L.A. refusing to give permission for the ship to sail up the Thames. Martin Garside of the P.L.A. said: "The ‘QE2 London' group did approach us earlier last summer but they have not identified a suitable permanent ‘alongside' berth on the Thames upriver of the Barrier for a ship of that size. A ‘permanent hotel' type proposal would certainly need full local authority planning permission and a number of other consents and of course the active involvement of the riverside landowner at such a location. "Our role with any proposal of this type is to ensure the safety of navigation of vessels moving on the tidal Thames or moored to facilities, and their impact on other river users. We would also need to assess any specific detailed proposal concerning a vessel that has not been in service for a long period very carefully. For example it is very unlikely a ship of this size could be safely brought into London without fully operational engines, thrusters and rudders."

The delay meant that the Chinese were able to offer debt-laden Istithmar -- part of the state conglomerate Dubai World -- the money they wanted for the sale.

Murray believes that unless QE2 London can secure planning permission the most likely scenario will be the ship will be towed to Shanghai to be used as a casino and floating hotel.

There is one other significant player involved in the negotiations -- former owner Cunard Line -- whose intervention could block the sale to the Chinese. Cunard has refused to comment on what it describes as “speculation”, and has posted the following message on its Facebook page: "We have noted the messages of understandable concern with regards to the recent article in the Daily Mail with reference to QE2. We remain in close contact with Dubai and can reassure you that to the very best of our knowledge this story is pure speculation -- one of a number of stories and rumours as we have seen over recent months. Our best advice would be to ignore the story." But according to Murray, Cunard has a contractual agreement with Istithmar stating the use of the ship cannot be altered until 2018, and he believes that Cunard will exercise this agreement as they would not want to “tarnish the image of the Cunard brand in the eyes of the British public.”

Rob Lightbody, owner of the TheQE2Story.com said: “I've known about lots of QE2 plans over the past few years, but not reported any of them, because I didn't believe they had the right backing or a workable plan. I'm reporting this one because it does. There is definitely still a chance for her to come back to London, it's definitely not all over yet. “I have contacts in Dubai and I'm pretty certain that a deal will be reached within the next week or so.”

QE2 is one of the most famous cruise ships in the world. The ship was built on the Clyde in Glasgow in 1967, and was requisitioned into service as a troop carrier in the Falklands War thirty years ago. In 2008 Cunard sold it for £64 million to Istithmar, which planned on turning it into a luxury hotel at the tip of the man-made Palm Jumeirah Island. However, when the credit crunch hit, the firm ran out of funds and the ship has been languishing in Port Rashid ever since.

--by Adam Coulter, U.K. Editor