Sky News has learnt that officials from Britain's central bank contacted other accountancy firms in recent days to signal a contest that will threaten KPMG's hold on a position it has held since just before the run on Northern Rock in 2007.
The review has been triggered by rules dictating that the Bank should put its audit work out to tender every five years, according to insiders.
A source said the tender was issued on Monday using the Crown Commercial Service Framework, a Government-recommended process.
KPMG's audit work for the Old Lady of Threadneedle Street spans the decade of the banking crisis and its aftermath, a period which has seen the Bank take on significant new powers to regulate the UK's financial system and parts of the City.
The 'big four' firm replaced PricewaterhouseCoopers (PwC), which had audited the Bank's accounts for more than 85 years.
KPMG has been invited to re-tender for the Bank's audit business and intends to do so, according to one source.
The status of the central bank's audit mandate means that the work is almost certain to be awarded to one of the quartet of firms which dominate the audit world, insiders believe.
Although the review is said to be statutory, it comes at a time when KPMG and some of its rivals, as well as their main regulator, face difficult questions about the quality of their audit work.
An investigation into KPMG's work as the auditor to HBOS prior to its collapse into the arms of Lloyds TSB was closed in September by the Financial Reporting Council (FRC), which said there was no realistic prospect of an adverse finding against the accountancy firm.
The FRC has promised to publish a report setting out the reasons for its findings, which it is expected to do in the coming weeks.
KPMG has also endured a torrid few weeks in relation to its work in South Africa with the controversial Gupta family, which is alleged to have had improper financial links with President Jacob Zuma.