Britain’s biggest lenders are bracing themselves for fresh turbulence on the wholesale markets amid suggestions that it may be weeks before the Bank of England agrees to free up the banking system with a bumper cash injection.

It is understood that, after a meeting with senior retail banking executives late last week, the Bank is happy in principle to provide additional liquidity when needed along the same lines as those agreed by the US Federal Reserve – but that it needs time to work out the details.

Extra liquidity is understood to have been one of the main requests made by the banks at last week’s meeting, held with Mervyn King, the Governor. It is also thought that the Bank is prepared to take a wider range of securities to use as collateral against loans.

The Bank confirmed over the weekend that it was considering ways to ease pressure on the funding markets for banks. However, the UK’s lender of last resort provided no firm details about the size or timing of any potential cash injection.

Sources close to some of the leading high street banks said that last week’s meeting with Mr King had gone well. One said: “There has been some movement. The Bank is looking at different measures.

“This is the Bank of England, though. It will want to think very carefully before doing this. Don’t presume anything will happen any time soon. It could be this week, but it could be weeks down the line.”

The Bank declined to comment yesterday, but on Saturday it did deny reports that it was considering using public money to fund a mass acquisition of mortgage-backed securities. It went on to say that it was “examining a number of other options, but it is too early to go into any detail”.

Short-term money markets have been paralysed since the middle of last year as banks fearful about their exposure to the crisis in mortgage securities become increasingly nervous about lending to each other. After fighting shy of a public intervention, the Bank last week doubled to £10 billion its auction of three-day money. Demand for it was nearly three times supply.

The Bank is to hold another auction of three-day money this Thursday. It may still use this scheduled sale to unveil further measures.

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