National Savings & Investments, the government-backed savings institution, is reporting a surge in the number of new savers, as thousands of disgruntled former Northern Rock customers flock to open accounts.

One source close to the NS&I said last night: "Northern Rock savers are queueing up to put their money with us. We are having trouble keeping up."

NS&I said that although the deluge of applications calmed over the weekend, numbers were still at unusually high levels. NS&I said that it is processing all applications without delay but new customers were coming in too fast to analyse which kind of accounts are being opened.

Northern Rock's chairman, Matt Ridley, has said in a letter to MPs that customers had closed almost one in ten accounts.

NS&I, which claims to be "the safest home for your money" on its website, is one of a number of banks and lenders set to cash in on the former building society's recent crisis.

Despite the assurance from the Treasury that the Government would guarantee savings deposits held at Northern Rock, savers are still moving their money.

The Post Office said that it too had seen a sharp rise in the number of savings accounts being opened in the wake of Northern Rock's emergency funding injection from the Bank of England.

Tomorrow, the Post Office, the savings institution that sells financial services over the counter alongside NS&I, will begin selling mortgages in the North East, Northern Rock's heartland.