Alistair Darling is set for a tense clash with high street banks today as he insists that lenders do much more to end the credit drought, while banking chiefs demand yet more government aid.

The Chancellor told MPs that he and Lord Mandelson, the Business Secretary, will put pressure on the banks to improve drastically the availability and cost of loans.

Mr Darling told the Commons Treasury Committee that banks needed to grasp that the “quid pro quo” for government aid to the banking system was that they should maintain more normal lending levels, and at competitive rates.

“Much more needs to be done. If you ask me is there more to be done, the answer is that there is much more to be done,” he said. “The banks have to understand that we have put substantial sums of public money in to support them. They, in turn, need to play their part . . . It is a quid pro quo as far as I am concerned.”

The Chancellor’s comments came as Bank of England figures underlined the limited extent to which swingeing cuts in official interest rates to 2 per cent are being passed on.

For homebuyers on banks’ standard variable rate (SVR), the average interest rate dropped by 0.56 percentage points last month to 6.39 per cent. Yet this fall is only a third of the cut in base rates. The average SVR mortgage rate is still 3.4 percentage points above base rates – the widest such gap since figures were first recorded in 1995.

The Bank’s figures tell a similar story for tracker and new fixed-rate mortgages, while for unsecured personal and business loans, average interest rates are going up rather than falling, even as base rates have dropped.

The Chancellor pointed to the trade-off that banks now need to bolster their profits in a way that is less generous than the ideal, to strengthen their finances to allow them to meet the economy’s lending needs in the future. But the continued shortage of loans and very limited fall in borrowing rates is an embarrassment for him.

Despite this, the banks are set to press the Chancellor for an extension of the Bank of England’s £200 billion Special Liquidity Scheme (SLS) that lets them swap hard-to-trade bonds linked to past mortgage lending for easier-to-trade government bonds against which they can raise funds.

The banks will demand a relaxation of the scheme rules so that they can use it to raise funds against even less reliable assets, such as credit card debt. They will also call for a loosening of rules on the amount of funds they must set aside for given lending levels.

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