The TV presenter, 58, has appeared on DIY SOS for 21 years, but his future is uncertain after inadvertently breaking BBC rules.
Host Nick plays a builder in the cereal ad and would be in “absolute torment” over the possibility of losing his presentation job because of it.
BBC bosses have reportedly suggested that the ad broke its advertising rules and that Nick was told last month during a Zoom meeting that he needed to have it removed – otherwise he would have to quit DIY SOS.
A source told The Sun: “ [The BBC] have very strict guidelines when it comes to their talent and publicity and he’s already broken them by filming the commercials. But Shreddies does not want to withdraw the campaign.
“While Nick is technically a free agent, he appears to have used his connection to DIY SOS in advertising which is totally irrelevant to the BBC. “
The insider added that Nick was given an ultimatum and the decision “may already be out of his hands.”
Representatives for Nick Knowles and the BBC told the Mirror in a joint statement: “The BBC and Nick are keen to resolve this issue and are working together to find a solution. “
The Shreddies ad first appeared in February, in which the presenter was called “Nick get it done Knowles”.
Nick started presenting DIY SOS when it first aired in 1999 and has since grown into a huge success.
The emotional episodes see Nick’s team combined with local volunteers helping a family in need transform their home.
He previously said he’s often left in tears away from cameras, adding: “I don’t think this moment should be about me. “