Despite the delays, Barclays is still offering its Tax Haven Isa, paying a market-leading 6.5%, to new customers.

Last year, staff complained of a “massive” backlog, after working to clear 2006 Isa requests well after the start of the 2007 tax year.

However, a spokeswoman for Barclays, said: “The processing time is coming right down. Although we did forecast an increase in applications this year, no-one could have foreseen the economic circumstances that led to so many people looking to invest their cash.

She added: “Last year, a third of the market come to Barclays for their cash Isa and this year it is closer to half. We apologise and ask customers to be patient.”

Since April, Barclays has been sending a letter to all applicants advising them of a four-week delay.

Existing customers who are able to open their account online and do not need to send in proof of identity have also been sent the letter.

Under guidelines set down by the Financial Services Authority, banks are supposed to open new Isa accounts within 14 days of receiving a customer’s deposit.

Barclays has said it will pay interest backdated to 10 working days after an application was made, however it was unable to guarantee when aggrieved customers would receive their payment.

David Black of research firm Defaqto said: “This should be a great time for savers, but some banks have been inundated with applications and just can’t cope.”

If you are looking for an alternative to Barclays, Principality pays 6.6% but on a minimum investment of £3,600. The rate is fixed for six months, after which it drops to 6%

Julian Hodge Bank pays 6.5% fixed for a year, again on £3,600. Meanwhile, Yorkshire building society offers 6.3% on a deposit of just £100, also fixed for a year.

You can earn more if you are prepared to go for a standard fixed-rate account.

Fortunately for savers, more providers than ever are offering rates over 7% as banks and building societies jostle for deposits to increase the cash side of their balance sheets.

Abbey was the first leading high-street bank to offer a 7.01% bond for deposits of £30,000, while last week, Yorkshire building society launched a two-year fixed-rate savings bond paying 7% on balances of up to £500,000, requiring a low minimum deposit of £100.

First Save, the Nigerian bank, now pays 7.10% on its one and two-year bonds for minimum deposits of £1,000; West Bromwich pays 7.05% on its E-Bond on a £1,000 minimum, while Icesave, the online Icelandic bank, also pays 7.01%. Bradford and Bingley offers 7% on a £1,000 minimum.

Rachel Thrussell of data firm Moneyfacts, said: “With the banks and building societies struggling to raise money on the money markets, tempting savers has become increasingly important.

“With fixed-rate investments, the institutions can guarantee that they will have your money for a set period of time, which they can then use for lending on mortgages or personal loans.

“With the credit crunch showing no signs of abating, who knows just how high these rates could go?”