Banks and building societies will be required to hold tens of billions of pounds more in highly liquid government bonds to ensure they are better equipped to withstand future panics by depositors.

The Financial Services Authority yesterday set out radical rules to ensure that deposit-takers are better able to handle Northern Rock-style runs by anxious savers.

The centrepiece of the reforms is a steep increase in the percentage of liabilities that banks will be required to hold in ultra-safe, ultra-liquid government bonds.

UK banks hold an average of 4.6 per cent of total liabilities in government bonds. The FSA would like a step change in these holdings, giving as illustrations an increase to between 6 per cent and 10 per cent. The precise minimum holdings required will depend on the fragility of the balance sheets of individual deposit-takers.

The FSA said: “Firms will be obliged to hold sizeable buffers and we would expect a marked increase compared with holdings under the predecessor regimes.”

Requirements for much bigger liquid assets buffers could provide a boost for Alistair Darling, the Chancellor, who will be aggressively seeking new buyers for gilts as he increases government borrowing over the next 18 months.

Banks are already huge holders of gilts, but the new requirements will force them to buy tens of billions of pounds more at a time when foreign demand is drooping because of fears that sterling might fall farther.

The FSA estimated that the revenues of British banks would be reduced by between £1 billion and £5 billion a year because of the requirement to hold low-yielding gilts. That cost could rise even higher if the difference in yield between gilts and higher-yielding assets widened farther, it said.

However, the extra expense to the banks could be offset by lower loan losses because of less reckless lending and a reduced cost of funding, the FSA argued.

The tougher regime is intended to equip banks better to prevent the customer runs that destabilised Northern Rock and Bradford & Bingley. Insufficient liquid assets - such as cash and gilts - and an over-reliance on wholesale markets for funding meant many UK banks were not well placed to withstand a flood of customer withdrawals.

As well as demanding that deposit-takers rely less in future on wholesale funding, the FSA also proposes more use of stress-testing and improvements to contingency funding plans.

One drawback of the new regime was that the ability of banks to lend might be “considerably reduced”, the FSA said. That could prove controversial after the Bank of England said the resumption of bank lending was the most important factor for preventing a further deterioration in the economy.

However, the new regime is not due to come in until next October, by which time the extreme stresses in financial markets may have eased. The new rules have been designed to bite when bankers next start to become over-exuberant.

Paul Sharma, the FSA's director of wholesale and prudential policy, told The Times: “This is not intended to be a curb on bank lending now. It is meant to be a check on unsustainable expansion of bank lending during favourable economic times.”

Retail funding, taking millions of small deposits across a branch network, has been a relatively expensive way of raising funds. Banks would also incur £150 million to £200 million of additional costs on information technology, reporting and staff training, the FSA estimated, while the authority's own expenses to police the regime would increase by between £11 million and £14 million.

However, the FSA argued that the benefit would be fewer financial crises, which could amount to an annualised boost to GDP of up to £5 billion. The proposed rules are based on internationally agreed liquidity standards.

One UK banker said: “Liquidity was the missing piece in the regulatory jigsaw. The FSA is asking the right questions.”

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