The era of big bonuses for bankers seems almost certain to end after ministers joined ranks in condemnation of the payments.

The Government's position hardened yesterday after David Cameron, the Tory leader, proposed that bonuses in taxpayer-funded banks be capped at £2,000. Sources close to the Prime Minister said that a cap on such payments could not be ruled out.

The pressure for new curbs increased after reports that Lloyds planned to pay out £120million in bonuses for last year. On Friday the bank gave warning that its subsidiary HBOS had lost £10billion - £1.6billion more than expected.

Stephen Timms, the Treasury Financial Secretary, warned that ministers would look “very, very carefully” at the Lloyds proposals. They would be scrutinised to make sure that they “do not amount to reward for failure,” he said. UKFI, which manages the taxpayer interest in the part-nationalised banks, will have urgent talks with Lloyds this week, emphasising that any bonus plans must bear relation to trading results and political opinion, officials said.

Tony McNulty, the Employment Minister, said that while junior bank staff should be protected, executives responsible for the mess the banks were in “should not get a penny”.

Mr Cameron said that bonuses should be capped even if senior traders and managers claimed their contracts entitled them to more. The banks should fight claims in court, if necessary, the Conservatives said. Share bonuses should also only be cashed in once the banks RBS, Lloyds, Bradford & Bingley and Northern Rock no longer enjoyed taxpayer help.

Vince Cable, the Liberal Democrat Treasury spokesman, said that bonuses should not be paid at all in banks that needed taxpayer assistance.

Introducing a cap on bonuses would mirror moves in America, where President Obama is expected to sign bonus curbs into law tomorrow as part of his $787 billion economic stimulus package.

All banks, publicly funded or not, could be saying goodbye to big bonuses because the Financial Services Authority is proposing changes to renumeration rules to prevent bankers being rewarded for over-risky behaviour. It is due to announce a shake-up of banking regulation next month.

Lord Turner of Ecchinswell, head of the FSA, said yesterday that politicians had allowed themselves to become too fascinated by the apparent expertise of financiers and bankers.

The FSA is to be given powers to penalise banks that do not spread payments over several years to reward long-term performance. Banks should be able to claw back payments from staff who ended up losing them money, Mr Brown has said.

Politicians will be watching the stock market nervously this morning, hoping that there will not be a repeat of Friday's plunge in Lloyds shares after its warning about HBOS losses. The bank has made no further application to the Government for additional bailout cash, the Treasury and No 10 made clear yesterday. Lord Turner said the FSA was not surprised that Lloyds did not need further capital because it had carried out “stress tests” on the banks in October to determine how much public money they needed.

The Tory leader said that the merger of Lloyds TSB and HBOS – which he supported at the time it was proposed in October – was now looking like “a bad decision”. Mr Cameron said his business spokesman Kenneth Clarke was, however, “very perceptive” to have opposed the merger from the back benches.

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