The UK government is to invest £37bn into three main high street banks under the bailout plan designed to shore up financial institutions.

Royal Bank of Scotland will take £20bn, with the government taking a controlling 60% stake in the bank as a result, while Lloyds TSB and HBOS - which are currently in the process of merging - will take £17bn for a 40% stake.

The Treasury said it did not intend to be a permanent investor in the banks and has laid down conditions in its new role regarding executive pay and director bonuses.

The move effectively part-nationalises the three companies, although private shareholders will retain substantial stakes.

The government has already been forced to entirely nationalise Northern Rock and Bradford & Bingley.

Barclays has announced plans to raise £6.5bn through private finance without the need for government assistance.