The struggling UK banking system is to be bolstered by a £50 billion emergency rescue package, Chancellor Alistair Darling has announced.

Taxpayers' money will be used to buy stakes in major banks in a bid to arrest the turmoil spreading through the country's financial sector.

The bail-out comes after banks suffered several days of stock market losses amid concerns over funding.

Mr Darling said the measures the Government was taking were in response to "extraordinary times".

"Those are absolutely critical so far as the system is concerned and we want to make sure that we can get the system going again," he said.

"It is a process that inevitably will take time. It is not an instant change but it is a restructuring, it is stabilising the system, and that is very important."

The Chancellor said the taxpayer would not lose out through the deal.

"The taxpayers' interest is being protected," he said.

"I'm very clear that in return for all this, the taxpayer has got to see some upside. In relation to lending to small businesses, in relation to mortgages... that's important too."

Mr Darling said he still did not "rule anything out" but, of the package, he said: "I believe it will go a long way."

Eight UK banks and building societies - including RBS, Barclays, HBOS, Lloyds TSB and Nationwide - have signed up to an initial £25 billion scheme.

And the Government said it stood ready to make at least another £25 billion available for other eligible institutions.

The Bank of England is also extending the existing £50 billion Special Liquidity Scheme to £200 billion, while a further £250 billion being pumped in under a debt guarantee scheme.

It is hoped that the extraordinary measures will provide the capital boost needed and help restore confidence to get banks lending to each other again.

But the Government is demanding that in return for the public-backed cash injection banks must cap executive pay and shareholder dividends and commit to supporting lending to homebuyers and small businesses.

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