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Chancellor Alistair Darling today launched a drastic rescue of Britain's high street banks in move designed to head off a cataclysmic failure of confidence by announcing a part-nationalisation plan with £50 billion of taxpayers' money.

He said there will also be extra help from the Bank of England to ensure that the banks have enough cash to run their day-to-day activities to help reassure savers and kick-start the paralysed credit markets.

The Bank of England will make available at least £200 billion to banks under the Special Liquidity Scheme.

Giving them more of our cash may not be enough

The Bank and the Treasury believe the move will benefit all banks but many bankers believe other measures will be needed

• British taxpayer to be tied into £50bn bank bailout

The taxpayer will pay in the end

Where will Alistair Darling find £50 billion in a hurry? The answer, inevitably, is from taxpayers

• It’s all very well, ensuring the survival of the banking system, but what’s in it for us?

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Seven banks and Britain's biggest building society have signed up for as much as £50 billion of additional finance from the government in exchange for the taxpayer taking preference shares, ordinary shares or permanent interest bearing shares (PIBS).

Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered have committed to raise their key Tier 1 capital ratios by £25 billion, which will be made available by the Government through the sale of preference shares and PIBS. An additional £25 billion would be available from the Government either through preference shares, PIBS or ordinary shares.

The Government will guarantee up to £250 billion worth of new debt for the banks to help them raise additional funds. This means that banks will be able to sell new short and medium term debt, backed by a Government guarantee to cover old debt that is due to be repaid. The Government also talk with the banks about the possibility that it will help them issue senior unsecured debt in sterling, dollars or euros, with repayment dates of up to 36 months.

HBOS has £8 billion worth of debt coming due in the next three months, with £3 billion outstanding at Royal Bank of Scotland and £5 billion at Barclays.

The Chancellor said this morning: "We need to get longer term lending, which gives confidence and allows banks to start lending again. It stabilises the system which is important

"We take preference shares or might underwrite ordinary shares. It's important the taxpayer gets some upside.

"I believe it will go a long way....as I've said before, we will do whatever it takes. Building up banks' capital is important. It's not all we're doing but it's an important step forward."

Mr Darling was forced into making an indicative statement last night after some banks shares virtually halved in value. His formal statement this morning was delayed for 20 minutes.

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