Transport for London has invited newspaper groups to register their interest in tendering for afternoon distribution, and set a July 1 deadline for the initial round of bids.
A TfL spokeswoman said that it had not yet made a decision on whether the contract would go to one or more winners.
A Guardian spokeswoman said: "We have registered our interest but it doesn't mean we will bid. We have yet to take a view on it."
Guardian staff are currently preoccupied with The Guardian's forthcoming format change from broadsheet to the tabloid-style Berliner format, which it is reported to want to introduce this autumn, earlier than the originally planned 2006 timescale.
Other newspaper groups are further ahead on the trail. Richard Desmond's Express Newspapers has been working on a concept called London-I for around two years, and is widely predicted to be the first to launch. NewsGroup Newspapers, publisher of The Sun, is also believed to be interested in the opportunity, but would not comment.
However, the Guardian Media Group does have a track record in the free newspaper market. It co-publishes the Metro free newspaper in Manchester with Associated Newspapers and the Manchester Evening News last month launched a free afternoon version, Manchester Evening News Lite, to reach 25- to 34-year-old ABC readers in the city centre.
The latest publisher to go free is the Financial Times, which last week revealed plans to distribute a double-sided A4 briefing in the City and business hotels, also available as a free PDF on its FT.com website, from the end of this month.
The potential for free newspapers in the capital and other urban centres has been proved by Associated Newspapers, which brought out the morning Metro in 1999 and then launched a free edition of the London Evening Standard, called Standard Lite, in December 2004.
Almost half-a-million copies of Metro hit Tube and train stations every morning, while around 72,000 copies of Standard Lite are distributed from bins next to Evening Standard pitches in central London every day.
Since the launch of Standard Lite, the Evening Standard's circulation has dipped only slightly from 347,523 in December to 346,265 in March.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .