The Bank of England moved today to widen the scope and lengthen the life of one of its main funding lifelines to the banking industry.

It said its new weekly three-month repo operations would be extended from 14 October to 18 November, with a further £40 billion made available this week.

It also extended the types of collateral banks can use to borrow the extra money from just mortgage-backed securities to a wider range of debt instruments, including types of consumer and corporate debt.

The repo lets banks access badly-needed cash, which they are having to borrow from the Bank of England because wholesale money markets have dried up. But they will have to pay at least 0.5% more interest than the normal overnight lending rate.

Governor Mervyn King stressed how keen the Bank is to adapt to the rapidly changing credit crisis.

He said: "In these extraordinary market conditons, the Bank of England will take all actions necessary to ensure that the banking system has sufficient liquidity."

After the Bank's move, the cost of interbank borrowing dollars for three months jumped again, to its highest level since January.

The three-month dollar London interbank offered rate rose 12 basis points to 4.33375%.

But overnight rates continued to fall, reflecting central banks' concerted intervention in recent days.