£50bn rescue package for UK banks

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The scheme will see taxpayers' money used to buy stakes in major banks in an attempt to halt the meltdown in the financial sector.

Mr Darling said that the measures the Government was taking were in response to "extraordinary times".

"Those are absolutely critical so far as the system is concerned and we want to make sure that we can get the system going again," he told Sky News.

"It is a process that inevitably will take time. It is not an instant change but it is a restructuring, it is stabilising the system, and that is very important."

Eight UK banks and building societies - including RBS, Barclays, HBOS, Lloyds TSB and Nationwide - have signed up to an initial £25 billion scheme.

And the Government said it stood ready to make at least another £25 billion available for other eligible institutions.

The Bank of England is also extending the existing £50 billion Special Liquidity Scheme to £200 billion, while a further £250 billion is being pumped in under a debt guarantee scheme.

It is hoped that the extraordinary measures will provide the capital boost needed and help restore confidence to get banks lending to each other again.

But the Government is demanding that in return for the public-backed cash injection, banks must cap executive pay and shareholder dividends and commit to supporting lending to homebuyers and small businesses. Details of the stake-buying scheme reveal that taxpayers will buy preference shares in the banks, which means that they will be first in line for the pay-out of dividends.