European governments overcame their differences yesterday, putting 1.7trillion (£1.33trillion) on the line in guarantees and other emergency measures to save the banking system.

The pledges, by six countries that use the euro along with the UK, dwarf the $700bn (£404bn) rescue package put together by US President George W Bush's administration.

Involving the UK, Germany, France, the Netherlands, Spain, Portugal and Austria, it followed weeks where European governments have often acted at cross-purposes.

"The time of each one for itself is fortunately over," said French President Nicolas Sarkozy. "United Europe has pledged more than the United States."

The money pledged by European governments will not go into a collective pot. Instead, governments are deciding individually how much to commit to supporting their own banks. The sums involved are considered a maximum and might not all be spent if the crisis eases.

About 250bn (£195bn) of the European pledges was earmarked to be spent on recapitalising banks by buying stakes.

Meanwhile, a scheme in Ireland to guarantee banks has been approved by the European Commission. The deal covers six Irish-owned banks and five foreign financial institutions with a significant presence in Ireland.