Top-level discussions have taken place within Downing Street about the cost of renovating Boris Johnson's official flat, the BBC understands.
Sources said setting up a charity to allow members of the public to donate towards the revamp has been considered to cover the cost.
Work on the flat, where the PM lives with his fiancee Carrie Symonds, is understood to be largely complete.
The PM's spokesman declined to comment on press reports about the cost.
When asked whether a charity had been set up, as first reported by the Daily Mail, he said they "wouldn't comment on speculation".
A source has told the BBC the interior designer Lulu Lytle has been involved in the upgrade.
Like several of his recent predecessors, Mr Johnson is living in the flat above No 11 Downing Street, the chancellor's official residence.
Mr Johnson and Ms Symonds moved into No 11 in July 2019. Their son Wilfred was born in April 2020.
The four-bedroom flat, which is much larger than the one above No 10, was extensively refurbished by David and Samantha Cameron in 2011.
The Camerons spent £30,000 on their revamp - the maximum annual public grant available to prime ministers for the upkeep of their accommodation.
According to the Daily Mail, Mr Johnson and his fiancee are considering options for how any expenditure over this annual limit could be covered.
Sources have suggested the matter has been of some considerable concern in Downing Street, with high-level meetings taking place.
Interior designer Ms Lytle is a co-founder of Soane Britain, an upmarket London-based interior design firm which specialises in traditional craft methods.
According to the company's website, its furniture can be found in "fine hotels and restaurants," private members' clubs, yachts and private houses.
London's Connaught and Claridges hotels, the Somerset Georgian manor Babington House and Shoreditch House private members' club are listed as clients.
Calls for transparency
Downing Street has said details of any work carried out on the Downing Street property would be published in the normal way later this year.
On Friday, the PM's spokesman said the Downing Street complex was a "working building" where refurbishments were made periodically.
Opposition parties have questioned the cost of the refurbishment, and whether conflicts of interest could arise if Conservative donors are approached to contribute.
Labour MP Sarah Owen has written to the PM asking him for details of taxpayers' contribution.
She has said the British public "rightly expect probity, integrity and transparency when it comes to spending public money".
The SNP has said the move would be "grossly inappropriate", suggesting the PM - who is paid £150,000 a year - should fund the works out of his own pocket.