Foreign banks have been asked to provide billions of pounds in loans to small and medium-sized businesses in the UK at a secret meeting with chancellor Alistair Darling and business secretary Lord Mandelson.

It is alleged that the government lobbied senior executives from Goldman Sachs, Deutsche Bank, JP Morgan Chase and BNP Paribas in an attempt to get them to participate in a government fund to assist SMEs.

It is understood that the banks were asked to contribute between £25 and £35m each to supply capital to small businesses.