Attempts by the coalition government to reach an agreement with the UK's largest banks on the amount they lend to small businesses have stalled.

The plan, known as Project Merlin, was due to be announced this week, but negotiations will now continue.

About £200bn in loans to firms was to have been made available in 2011.

The stumbling block is thought to have concerned governance issues.

Bank bosses argue that lending targets for what could be weaker businesses could breach rules that say any decision should be in the best interest of shareholders.