Britain's Treasury and top banks were hammering out final details of a plan to limit lenders' losses on about £500 billion of risky assets, which the government said should help prevent full nationalisation.

Britain has pledged to unveil the scheme this week and is expected to announce terms for part-nationalised Royal Bank of Scotland and Lloyds Banking Group when they report results on Thursday and Friday respectively.

Firm details of the asset protection scheme have not yet been agreed. Among the key issues being discussed is the scale of loss banks will take before the insurance kicks in.

Finance minister Alistair Darling said the aim was to allow banks to lend more, and he played down fears the lenders will be fully nationalised.

By 09:20am shares in RBS were up 7.7 percent to 23.8 pence and Lloyds rallied 8.4 percent to 58.4p.

"It is important that the banks' equity will continue to be owned by institutional and individual investors as well as by the government," Darling wrote in today's Financial Times.

"That will make it easier for current and future investments in these banks to be returned to full commercial operation."

His comments echoed U.S. Federal Reserve Chairman Ben Bernanke, who said on Tuesday that U.S. banks should be able to weather the downturn without being nationalised, sending bank stocks sharply higher.

Darling said under the UK plan the government had "made it clear that we expect the banks to enter into legally binding, specific and quantifiable agreements to increase the amount of credit in the economy."

Under the scheme, first outlined in January, banks will be able to insure themselves against their riskiest assets suffering sharp falls to give them a chance to clean up their balance sheets.

"There are discussions going on, perfectly proper discussions," Stephen Timms, Treasury minister, said on Wednesday on BBC television.

"We said last month we would publish the details by the end of this month... and that's what we're confident we're going to be able to do."

RBS, which is 70 percent owned by the UK government, is expected to put up to 250 billion pounds of assets into the scheme, and Lloyds - 43 percent state-owned - could put in a similar amount, according to analysts' estimates.

The scheme will significantly reduce banks' risk weighted assets, boosting their capital ratios to provide a bigger cushion as they face rising bad debts from a faltering economy.

Banks are expected to pay a one-off fee of 3 percent to 4 percent to take part, and the government is in talks on the best way for them to pay the billions of pounds needed.

Lenders were expected to take a "first loss" on the assets of about 10 percent, but newspapers said that issue is at the heart of the final talks.