Gordon Brown was last night accused of taking Britain "back to the 1970s" after the UK Government admitted it had failed to secure a private buyer for Northern Rock and had no choice but to nationalise the crisis-hit bank.

Today, the Prime Minister and Chancellor Alistair Darling will face a political whirlwind as the full implications hit home of taking the mortgage-lender into temporary public ownership.

The move is a risky strategy. The long-term plan is to return the bank back to the private sector. It is hoped that better market conditions will make Northern Rock a more appealing prospect to buyers.

But how long that would be is anyone's guess. Mr Darling said that it would happen "when it is the right time to do so".

At noon today, Mr Brown will attempt to shrug off the embarrassment and shape the political fall-out as he faces a barrage of questions from journalists at his monthly Downing Street press conference. Four hours later, Mr Darling will attempt to do the same before MPs in what is bound to be an animated Westminster Parliament.

Emergency legislation to nationalise Northern Rock will have to be rushed through the Commons and the Lords. This morning, shares in the bank were due to be suspended.

Last night, George Osborne, the Shadow Chancellor, branded the UK Government's decision "catastrophic". Conservatives will be hoping this is Mr Brown's equivalent of the ERM debacle of Black Wednesday, which paved the way for John Major's defeat in 1997.

"This is the day when Labour's reputation for economic competence died," declared Mr Osborne. "Gordon Brown has dithered his way to the disaster of nationalisation. Now the taxpayer will bear the full risk of lending £100bn of mortgages in an uncertain housing market. We will not back nationalisation. We will not help Gordon Brown take this country back to the 1970s." This, of course, is the era associated with industrial strife, including strikes and power cuts.

Vince Cable for the Liberal Democrats, who have long called for a temporary nationalisation, insisted it was the Prime Minister who had been "calling the shots" and had set up the Chancellor as "the fall guy". He noted: "His political future does not look good but ultimately the Prime Minister takes the rap."

Mr Cable added: "There are a lot of unanswered questions about who, for example, is paying for the long detour exploring the Branson bid but at least the government has now made the first move towards tackling this mountain of a problem."

Stewart Hosie, for the SNP, said: "While the genesis of the Northern Rock disaster - the global credit crisis - cannot be laid at the door of the UK Government, its dithering since then has been responsible for the commitment of billions of pounds in taxpayers' money in loans and guarantees."

Labour's John McFall, chairman of the Commons Treasury Committee, welcomed the UK Government's decision, pointing out it had explored every avenue. "At the end of the day, the biggest issue is safeguarding taxpayers' money. If nationalisation saves that money, that has to be the correct step in the long term," said the MP for Dunbartonshire West.

It was just before 4pm yesterday when the Treasury announced Mr Darling would make a statement. The timing was something of a shock as most experts had expected the decision to be announced via the stock market or the House of Commons.

In his statement, the Chancellor explained that "under the current market conditions" neither of the two private proposals - one by a consortium led by Virgin's Richard Branson and one by the bank's own management - delivered "sufficient value for money to the taxpayer".

Stressing the move met the UK Government's key objective of protecting taxpayers' interests, he said he had been told by the Financial Services Authority that the Newcastle-based bank was solvent and that its mortgage book remained of good quality. Ron Sandler, the former chief executive at Lloyd's of London, will now run the business.

Mr Darling insisted "every option" for a private sector solution had been explored but, despite last-minute revisions by the two bidders, the private-sector solutions had not met the UK Government's tests. The bank would be transferred back to the private sector "when it is right to do so".

The Chancellor added: "It is better for the government to hold on to Northern Rock for a temporary period and as and when market conditions improve the value of Northern Rock will grow and therefore the taxpayer will gain."

In the short term, yesterday's decision appears to be bad news for shareholders - the UK Government will have to buy them out at an as yet unknown price and could face legal action from some of the major investment funds - and employees. Restructuring will inevitably mean job losses. Union leaders are due to meet Mr Sandler today.

Sir Richard Branson reacted by saying that nationalisation was "not the right answer".

He added: "We have tried our best to save the Northern Rock and the jobs of the staff. We put all the resources of Virgin's senior management team on this for five months and we believe had a very strong proposal. We believe nationalisation is not the right answer and that a commercial solution would have been the best way forward."

The Northern Rock crisis began last September when it was forced to call on emergency funding from the Bank of England after soaring costs as a result of the drying-up of the money markets on the back of the sub-prime housing crisis in America.