The Scottish knights opposing the Lloyds TSB takeover of HBOS today abandoned their campaign, blaming the Government for putting impediments in the way of an alternative rescue.

Sir Peter Burt and Sir George Mathewson took a final swipe at the HBOS directors, accusing them of apathy and a lack of transparency, but admitted there was no hope for their plans.

The Chancellor's statement on Tuesday, underlining its commitment to the present deal and warning that public support for any alternative might be on inferior terms, was the final straw.

"The Government's statement has raised several hurdles very high and has made it crystal clear that they do not want and are not prepared to facilitate HBOS remaining independent," their statement said. "Accordinlgy Sir Peter and Sir George reluctantly decided to discontinue their campaign."

The two men lobbied for HBOS to reject the Lloyds offer and hire them as chairman and chief executive, but outside Scotland their campaign never gained serious support.

Lloyds shareholders this week overwhelmingly voted in favour of the takeover. HBOS shareholders are due to vote on the deal next month.

The takevoer would create a giant in UK personal financial services but is expected to lead to tens of thousands of job losses.

The knights revealed that they had received offers of £500 million of fresh capital "from private sources" to help keep HBOS independent.

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