Alistair Darling today urged fellow finance ministers to press ahead immediately with international efforts to prop up the ailing banking sector.

The Chancellor of the Exchequer warned that any further delays in wiping out the threat of toxic debt threatened to undermine hopes of economic recovery.

“If we do not fix the banks, we will not fix the economy,” he said ahead of a meeting of the G7 finance chiefs in Washington.

Mr Darling also insisted that the G7 nations and larger G20 club must follow through on pledges to increase resources for key global lenders.

The International Monetary Fund estimates that more than $4 trillion of bad assets are weighing on the balance sheets of US, European and Japanese banks in the crisis, much of that total still undeclared.

“A lot of banks have impaired assets that need to be dealt with,” Mr Darling told the Council on Foreign Relations, a Washington think-tank.

“Whatever happens, it’s got to be sorted out. . . If you keep discussing it ... we’re losing time,” he warned.

Finance chiefs at the G20 meeting later are planning to assess progress in the three weeks since leaders pledged to combat the worst global economic crisis since the 1930s Great Depression at a summit in London.

Mr Darling highlighted the need to protect the emerging market economies as engines of global growth in efforts to stem the crisis.

“You’ve got to make sure that we help these economies now,” he said. “In the long term, you need to make sure that all economies benefit."

The Chancellor said he expected a “pick-up” in the British economy at the end of this year after suffering a “very difficult past six months".

The G7 developed nations are expected to issue a communiqué tonight but no statement is expected from the later meeting of the G20.

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