The UK government has announced a follow-up package of measures to encourage banks to lend to individuals and businesses. The long list of measures includes a scheme to offer insurance against banks losing more money from the bad debts that started the credit crunch, with Prime Minister Gordon Brown condemning the banks that had made losses from "irresponsible" lending.

The four key points of the package are:

• Banks will be able to take up government insurance against their expected bad debts

• The Bank of England will be able to buy stakes in companies in all sectors of the economy

• Northern Rock has been given extra time to repay its loans from the government

• The government is increasing its stake in Royal Bank of Scotland (RBS) to nearly 70% from 58%. RBS also said it was set to report a huge loss for 2008, with asset write-downs of up to £20bn.

Commenting on the Government's new banking package, Richard Lambert, (PICTURED) the CBI's Director-General, said: "This is a momentous day - but extraordinary times demand extra extraordinary policy solutions. The viability of ordinary businesses was under threat, putting jobs and investment across the land at risk. The Government needed to be bold and it has been."

This latest initiative also includes an enhanced role for the Bank of England, which will be able to buy up to £50bn of assets directly from firms. In the past, it has only bought such assets from banks or financial institutions. A new subsidiary company will be set up to buy the assets, but the Bank's executive will decide what sort of assets it will buy and from which companies. But the list of assets includes corporate bonds, so some companies will now be able to borrow money directly from the Bank of England.

This new framework may also be used by the Bank of England's Monetary Policy Committee (MPC), which sets interest rates, to buy assets to help it meet the inflation target in a practice known as quantitative easing.