He said: "Working together, we can pass the necessary legislation within days. The British public would know their savings are safe, even if the decision were made to let a financial institution fail."

He said this measure would give the UK authorities the same flexibility as the US ones have demonstrated in their handling of Bear Stearns, Lehman Brothers and Merrill Lynch.

In his third letter to Mr Darling offering support on the issue, he said: "The need for an effective depositor-protection regime is now more pressing than ever."

Kevin Mountford, head of savings at moneysupermarket.com, said: "We call upon the Government to take decisive action now and help give consumer confidence a boost - or there is a real danger many people will prefer to keep their savings under the mattress than in their bank!"   

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