British troops who face having their savings raided because of the European bailout of Cyprus will be compensated, the Government has said.

Around 3,000 military personnel and 250 civil servants will be protected should their savings be subject to the levy on bank accounts in Cyprus, the Treasury said.

As part of a £9 billion bailout, European officials said people with less than 100,000 euro (£87,000) in their accounts will have to pay a one-time tax of 6.75% and those with more will lose 9.9%.

A spokeswoman for the Treasury said: "How much it will cost will be something that will be worked out over the next few days. It's obviously dependent on the number of service personnel who have bank accounts and then, because it's very personal information, it will depend on how much money they have in their bank accounts. And that's obviously something that takes time to work out.

"Those that will be compensated will be armed service personnel and anyone who is working out there on behalf of the Government."

There are also 59,000 British residents in Cyprus and 1.1 million Britons visit the island every year, the Foreign Office said.

News of the levy came as a shock, following assurances from Cyprus president Nicos Anastasiades that he would not accept a deal which required depositors to share in the losses.

Cyprus has become the fourth euro area country to get a rescue package to save its banks that suffered significant losses because of their exposure to Greek debt.

The levy marks the first time the IMF and the 17 eurozone nations have dipped into people's savings to finance a bailout.

A vote on the issue, expected to take place in Cyprus's parliament, has been postponed until Monday.