Gordon Brown and Alistair Darling moved swiftly yesterday to reassure customers of Northern Rock as panic began to set in among some of the bank's customers.
The Prime Minister's spokesman insisted the fundamentals of Britain's economy "remain sound" and there was a "very well-established system for dealing with financial stability and issues of that kind".
He added: "The Financial Services Authority has judged that Northern Rock is solvent There are facilities in place to provide support of this kind and Northern Rock is the only institution that has approached the Bank of England to request support of this kind."
Earlier, Mr Darling said: "The problem here is there is a lot of money in the sys- tem but they are reluctant to lend it to each other at the moment."
He explained that to create a stable banking system, the Bank of England stepped in and it made facilities available to the Northern Rock.
"Northern Rock can draw on them when it requires but it means it can carry on trading, people can use their accounts in the normal way, they carry on making their mortgage payments in the usual way, Northern Rock will be able to carry on its business," he added.
George Osborne, his Tory Shadow, made clear the Conservatives supported the Bank's action to protect the mortgage lender.
However, he pointed out there was a more fundamental question about why Mr Brown had "allowed the creation over 10 years of an economy built on debt with consumer borrowing trebled and the largest budget deficit in Europe in a way that threatens the broader stability of the economy".
He added: "I have always said that stability should come first."
Elsewhere amid the financial jitters, a Populus poll showed that among all voters 61% trusted Mr Brown and Mr Darling to deal with economic problems compared to just 27% who said they trusted David Cameron and Mr Osborne to do so.
In a separate development, a senior aide to the PM fuelled speculation about an early General Election by claim- ing Mr Brown's party conference speech in nine days would be his "last before a General Election".
While the consensus at Westminster is still that the Prime Minister will not go the country this autumn, opinion is split as to whether he will call an election in the spring of 2008 or the spring of 2009.
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