ITV was told by investment bank Deutsche Bank, which is conducting the sale, that it had failed to make it through to the second round of bids.
Private equity groups were ruled out of the running because Telewest is only interested in trade buyers that will bring content, channels and cross promotion to the Flextech group of channels.
BSkyB is understood to be the frontrunner in the race with German broadcaster RTL, which owns Five, also thought to be in the running to scoop the business.
Flextech comprises the channels Living TV, Bravo, Challenge and Trouble, which feature programmes such as the top-rated 'Alias' and 'Will & Grace' and a 50% stake in nine UKTV channels with the BBC.
US media giants Viacom, Discovery Networks, NBC are also said to still be in the running, while it is not known whether Channel 4 or Hallmark TV-owner Sparrowhawk are still in the race.
The BBC is understood to have a considerably influence in who Flextech's buyer might be. If Flextech is sold, a change of control clause gives the BBC the right to acquire the 50% of UKTV it does not own at the market rate.
Telewest is selling Flextech ahead of a mooted £5.5bn merger with rival cable group NTL.
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