British Finance Minister Alistair Darling said the scheme would help unblock the financial system in Britain, which has been hit by the knock-on effects of the United States sub-prime mortgage crisis. He insisted that the banks would have to repay the money.

'The Bank of England will be making an announcement tomorrow in which what it will do is effectively lend the banks money to unfreeze the situation we've got at the moment,' Mr Darling told BBC television yesterday.

'If that does not happen, then I think there's every chance that the situation will get worse.'

Pressure has been growing on the British government to do more to resolve a mortgage debt crisis threatening to slam the brakes on its economy, and which is contributing to a slump in support for Prime Minister Gordon Brown.

The government is also desperate to stop another bank from getting caught in the crunch after Northern Rock was nationalised this year.

Banks have warned that lending could halve this year. Their fear that high-risk mortgage debt is lurking on balance sheets has driven the interest rates at which they lend to each other well above the Bank of England's benchmark interest rate, raising borrowing costs for households and companies.

The new plan is expected to allow banks to temporarily swop mortgage-backed securities for government bonds to help free up their balance sheets and allow them to lend more to consumers.

Mr John Redwood, a senior Conservative Member of Parliament, told The Times of London: 'This latest move completes their extraordinary U-turn from wrongly saying last September there would be no bailouts or help for the banks, to now adding a £50 billion money market package to the £100 billion nationalisation of Northern Rock.'

REUTERS, AGENCE FRANCE-PRESSE