Silverstone is not on the provisional 2005 calendar, which must be ratified by the FIA world council on October 13.
Formula One boss Bernie Ecclestone reportedly wanted around £9million from owners the British Racing Drivers' Club (BRDC) to host the race.
BRDC president Sir Jackie Stewart described the decision as "a disaster" and called on Ecclestone to rethink.
If the decision stands it will be the first time Britain is missing from the Formula One calendar since the world championship began, at Silverstone, in 1950.
Stewart was also critical of the Government for failing to offer financial help to Silverstone. But the Government responded immediately, defending its record of investment in and around Silverstone.
A spokesman for the Department of Culture, Media and Sport told the BBC: "Clearly the Government supports and wants to see a British Grand Prix at Silverstone.
"But the current commercial negotiations about the promotion of the Grand Prix are a matter between the BRDC and Formula One.
"We have done everything, and will continue to, to help bring the parties together to discuss the matter.
"The Government has already made significant financial contribution to motorsport and Silverstone - in 2002 we invested over £16million to support the industry and £8million to improve road access around the track."
