Northern Rock plans to axe 2000 jobs in the next three months, piling more pressure on Gordon Brown and Alistair Darling ahead of vital elections.

The Newcastle-based bank - nationalised following its collapse in the wake of the credit crunch - is expected to come clean over the job losses next week. It will be a major blow for the Prime Minister and his Chancellor as millions of voters go to the polls in local elections and to pick a Mayor for London.

Most of the losses will be in the Labour heartland of the North-East of England where the bank is based.

Ever since the Government nationalised Northern Rock and put Ron Sandler in control as chairman, it was expected to make around a third of its 6000 staff redundant. However, the cuts were reckoned to come over three years, so the sudden cull will come as a major shock.

When Sandler unveiled his rescue plan last month he warned job cuts were necessary to preserve Northern Rock as "a viable financial institution capable of being returned to the private sector".

Northern Rock was nationalised amid a political and financial storm after it ran out of money in the credit crunch and was forced to go cap in hand to the Bank of England for emergency funding. The last thing the Government wants now is to effectively oversee a wave of job cuts.

Unions have argued that making such a large number of workers in the North-East redundant in such a short space of time could put huge strain on the local economy. Business groups and local councils have set up the Northern Rock Response Group task force to help find dismissed staff new jobs.

The bank is seeking to halve its £110 billion mortgage book and has all but stopped taking new business as it slims down its business.