The Government has drafted in Goldman Sachs to advise the Treasury on how best to protect savers of the beleaguered mortgage bank, Northern Rock.

It is understood that Goldman, a big adviser on privatisations, is giving the Treasury specific advice on the "mechanics" of the Government's guarantee for the UK's fifth largest lender.

Alistair Darling, the Chancellor of the Exchequer, promised just over a week ago to underwrite the savings accounts of Northern Rock's existing account holders.

He also pledged to guarantee short-term deposits rolled over by lenders in the wholesale market.

Goldman Sachs is also understood to be involved advising the Government department over other future options for Northern Rock, which suffered a massive run on the bank after it admitted seeking emergency funding from the Bank of England.

These include a sale or a potential break-up, although buyers, including banks and hedge funds, so far appear to have shunned the Tyneside-based lender because of worries about its mortgage book.

It is understood that the Treasury approached Goldman Sachs late last week in the wake of two clarifications circulated to the stock market about the limits of the Government's guarantee. On Wednesday, the Treasury said new Northern Rock savers would not be covered, while depositors of funds from the wholesale markets would have their funds underwritten.

On Thursday, the Treasury added that the guarantee would cover deposits rolled over, for the duration of the arranged rollover period.

A source close to the matter said: "The Government is using Goldman's expertise alongside its own. They are advising the Treasury on some of the mechanics of the guarantee in place."

The Treasury said: "We don't disclose advice provided by external advisers."

Goldman Sachs declined to comment.

It comes as Merrill Lynch, which is busy trying to find a buyer for Northern Rock, runs into reticence from several banks. Lloyds TSB has come the closest to taking over the northern lender, although several high-street names are thought to have considered making a move.

Northern Rock shares lost 3p to 169p. At the beginning of this year they stood at 800p.

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