The British government will have a big part in the country's banking sector for years to come but competition and choice for consumers must be maintained, Alistair Darling said today.

"The government will have a significant role in the banking sector for some years to come," Darling told a financial services conference.

The banking industry, shored up by billion of pounds of taxpayer's money, was still consolidating.

"So we do need to be vigilant and make sure choice and competition is maintained," Darling said.

The worst financial market crisis in over 80 years has helped to tip many economies into recession, including Britain's, sparking a root and branch review of how markets are supervised to plug gaps highlighted by the credit crunch.

One gap is the lack of efficient supervision of how risks from one bank can affect broader market stability, known as macro prudential oversight.

"I support the establishment of a macro-prudential body in the European Union. And both the Bank of England and the Financial Services Authority should play a leading role in the body," Darling said.

Darling said he has also proposed an independent EU regulatory standard setter but reiterated that supervision should remain in the hands of national supervisors.

Last week, EU leaders backed creating two new bodies, one to supervise macro systemic risks.

But the second EU body would go further than Darling's standard setter and be able to impose binding measures on a national watchdog deemed to take insufficient action.

Britain has nationalised Northern Rock bank and taken majority stakes in Royal Bank of Scotland and Lloyds Banking Group.