The credit card industry has been given a two-week deadline by the government to agree a code regarding interest rate increases, or be referred to the Office of Fair Trading (OFT).

The ultimatum followed a meeting by leading members of the industry and business secretary Lord Mandelson.

With cash flow tight in the current economic climate, many small businesses owners have been using their credit cards an increasing amount.

Lord Mandelson said he would have no problems referring card companies to the OFT if they did not, "start treating people in a fair, reasonable and consistent manner."

The credit card industry has agreed to suspend its pursuit of bad debt for two months where it has received formal notice that a customer is seeking a repayment plan.

Some credit card providers have increased interest rate charges by as much as 5% since the middle of 2008.