Bank of England in new $30bn bid to ease the agony

The $30 billion (£16.7 billion) injection — available to banks for one week — came on top of the $40 billion ploughed in since last Friday and took the total it is offering to $70 billion.

But borrowing rates between banks, known as Libor, today remained stubbornly high as banks scared of lending to each other amid spiralling losses hoarded cash.

The three-month dollar lending rate rose from 4.05% to 4.15%, while in sterling it edged up from 6.30% to 6.31%.

Overnight dollar lending did fall to the still relatively high 3.79%, however, after hitting a record 6.88% last night following the vote-down of the US Government's $700 billion bailout plan.

Central banks around the world are fighting desperately to support the crippled banking system.

Demand for dollars in particular has rocketed in Britain and Europe since the collapse of Lehman Brothers and concerns about the future of other US banks.

The Bank of England first made dollars available last month in the wake of the Lehman failure with the offer of $40 billion. It raised the offer to $70 billion today.

It also said it would accept a wider range of collateral from the banks it lends to, including assets with lower credit ratings than Governor Mervyn King had previously been willing to stomach.

This followed yesterday's crisis meeting between King, the Prime Minister and the Chancellor at Downing Street.

Central banks such as the Bank of England, US Federal Reserve and European Central Bank are pumping billions of dollars of emergency funding into the money markets.

However, critics say the extra liquidity has failed to achieve its objective and failure to break the deadlock is a serious concern to central banks hoping to avoid a deep and prolonged recession.

The Bank will offer $30 billion for one week and a further $10 billion overnight.

It comes on top of last Friday's one-week $30 billion provision which ends this Friday, when the Bank holds another $30 billion one-week auction.