A confrontation is building up between Mervyn King, the Governor of the Bank of England, and the Treasury over the choice of a new deputy for Mr King.

The Governor is believed to be pressing hard for Charles Bean, the Bank's chief economist, to take over from Rachel Lomax, who steps down as one of two Deputy Governors on June 30.

However, Mr King's strong preference for Professor Bean as the Bank's next Deputy Governor in charge of monetary policy is running into strong Treasury resistance in a stand-off that threatens to inflame an already tense relationship.

It is understood that senior Treasury figures advising the Chancellor are pressing for a “more balanced” team at the top of the Bank and argue that Ms Lomax must be replaced with a heavyweight figure, with financial expertise, who can command respect in the City.

The thinking inside the Treasury is that the Bank's management has become unbalanced, given Mr King's own background as a respected academic economist, with Ms Lomax and Sir John Gieve, both former Whitehall permanent secretaries, as his deputies. There is also Treasury concern that Sir John, who was heavily criticised over his role in the Northern Rock affair, does not command sufficient City clout in his role of running the Bank's oversight of markets. With Sir John not due to step down until 2011, Ms Lomax's departure is seen as a chance to install a City heavyweight.

One source said that there was a view that appointing “another academic economist” mirroring Mr King's expertise would do nothing to enhance the balance of the Bank's senior figures. The Governor's backing for Professor Bean is also seen as having undercut any chance of promoting Paul Tucker, the Bank's markets director, who is favoured by some at the Treasury.

A key source of tension with Mr King is that, while it is Sir John's role to oversee the Bank's markets role, the holder of Ms Lomax's post would be in charge of its economics work.

Mr King raised the stakes on Friday, authorising a public statement insisting that the post must go to a top economist. “This is the Deputy Governorship for monetary policy, and it is essential that it should be filled by someone with a professional background in monetary policy. That is particularly important as the economy enters the most difficult period since 1997,” the Bank said.

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