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"The programme is designed to restore confidence and trust in the financial system and, more than that, to put the British banking system on a sounder footing so as to build strength so that it can support jobs and prosperity right across the economy," he said.

But both he and Mr Darling have been blamed for failing to act more quickly in the face of this week's market meltdown, in which some major British banks have seen their share prices more than halved as the City waited for the details of a rescue plan.

The FTSE 100 Index was in fresh turmoil today as investors digested the bank rescue package and followed the lead from Asia. It opened 2 per cent lower but went on to fall nearly 7 per cent in the first hour of business, before climbing back up to stand around 180 points, or nearly 4 per cent down.

Royal Bank of Scotland, whose shares dived nearly 40 per cent yesterday, slumped again in early trading but then began to soar: by 11.50pm it was up 55p, opr almost 60 per cent, at 149p. RBS was up 28p, or 31 per cent, up at 118p, while the other major banking stocks were more narrowly mixed.

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David Kern, economic adviser at the British Chambers of Commerce, said he welcomed the "radical measures" taken by the Government to restore stability but called for an interest rate cut and lower business taxes.

"Given the erratic mood of volatility in the financial market there remains clearly a risk of renewed speculative attack," he added. "The current financial turmoil must not be allowed to damage the real economy. The vital flow of finance to businesses and consumers must be maintained at all costs."

In Downing Street, Mr Brown also announced that the UK had put forward plans this morning for a pan-European funding plan and was also in discussions with the leaders of both industrialised and major emerging economies.

He added: "This comprehensive set of decisions on stability, on restructuring and on financing are the necessary building blocks to allow banks to return to their basic function of providing cash and investment for families and businesses and thus help the economy move forward.

"These decisions are the best way of providing long-term security for depositors and savers."

Asked why he would not offer a concrete guarantee to all savers that their deposits were safe, Mr Brown stressed that no one had yet lost out in any of the banks which had hit difficulty, such as Northern Rock and Bradford & Bingley.

The same support was also being given to those with money in troubled Icelandic bank Icesave. The Treasury confirmed today that British savers' money would be guaranteed by the Government, even above the current £50,000 limit.

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