The £400bn rescue scheme – equivalent to more than £13,000 for every taxpayer – came in three parts:

£50bn to rebuild capital reserves at seven banks and one building society – Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scot- land and Standard Chartered;

£250bn in loan guarantees, available at commercial rates, to encourage banks to lend to each other;

£100bn of short-term loans to thaw the lending markets – on top of an existing £100bn available under the Special Liquidity Scheme.

The astonishing part- nationalisation of Britain’s entire banking system put in the shade the earlier taking into public ownership of Northern Rock and Bradford and Bingley.

The package was brought forward after a catastrophic slump in bank shares on Mon- day. Royal Bank of Scotland shares fell by 39% and HBOS lost 40%. RBS and Barclays are thought to need £15bn each in fresh capital, with Lloyds TSB requiring £12bn – assuming its takeover of HBOS goes through.

At a morning press conference, Mr Brown said: “Extraordinary times call for bold and far- reaching solutions. Our stability and restructuring pro- gramme is comprehen-sive, it is specific and it breaks new ground.

“The programme is designed to restore con- fidence and trust in the financial system and, more than that, to put the British banking system on a sounder footing.” and to build strength, so that it can support jobs and prosperity right across the economy.”

The Prime Minister stressed the “strings attached”. To get the Government’s support, the banks would be required to sign up to a “case-by-case” agreement on executive pay and dividends.

And he insisted the taxpayer was fully protected – even holding out the prospect of a taxpayer profit when the crisis is over, because the “preference shares” purchased make holders first in line for the payout of dividends.

In the Commons, Conservative leader David Cameron urged Mr Brown to go further in stamping out “rewards for failure”, by ensuring no executive of a failing bank received a bonus this year.

In contrast, the Liberal Democrats backed the Government “wholeheartedly”, with leader Nick Clegg telling MPs: “We must show the British public that we can work together to halt the downward spiral in the British economy.”

Last night, more than 20 local authorities with investments in the collapsed Icelandic bank Icesave urged the Government to step in to help.

They raised fears after Chancellor Alistair Darling guaranteed the deposits held by individual savers – but suggested councils would not be eligible for compensation.