Bank to inject billions into system

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Mr Darling said the Bank will make an announcement about how it intends to get cash into the system, secured on the mortgage assets of lenders.

Banks have been reluctant to lend money to one another following the collapse of the sub-prime mortgage market, limiting the amount of cash available for new home loans.

The Chancellor told BBC One's Andrew Marr show: "The Bank of England will be making an announcement (on Monday).

"What it will do is effectively lend banks money to unfreeze the situation we have got at the moment."

He added: "We are trying to unbung that situation so that the Bank will be making money available to the British banking system.

"It will be lending the money, so its got to be repaid, and we will take securities in return for it.

"But the idea behind it is that it will open up the market and it will begin the process of opening up the mortgage market which will help householders."

Reports have suggested the Bank will swap £50 billion of Government bonds for lenders assets, prompting critics to claim that the taxpayer is taking on the banks' risks.

But Mr Darling, who will make a statement on the situation to the House of Commons when it returns, insisted the money will be repaid.