LONDON, April 21: The Bank of England unveiled a 100-billion-dollar plan on Monday to get Britain’s home loan market moving again in the latest attempt to combat the global credit crunch.

The BoE said it would allow high street banks to swap mortgage-backed securities for government bonds in a bid to boost their liquidity at a time when banks are reluctant to lend to each other.

Britain’s main home loan providers are rapidly tightening their lending criteria as fears persist over the sector’s exposure to the collapsed subprime or high-risk housing market in the United States.

“The Bank of England is launching a scheme to allow banks to swap temporarily their high quality mortgage-backed and other securities for UK Treasury Bills,” the central bank said in a statement.

BoE governor Mervyn King said the measures could eventually reach double the initial amount of 50 billion pounds, telling reporters the plan has “no arbitrary limit on it.”

King denied banks were being “bailed out” by taxpayers, saying they would pay for the privilege, and insisted the move was essential to “protect the rest of the economy” from the credit freeze.Britain’s finance minister Alistair Darling told parliament the scheme would “help businesses, individuals and in particular the mortgage market.”

The chancellor of the exchequer called on banks to fully disclose their losses from the subprime crisis “as soon as possible” and insisted Britain’s financial system was “fundamentally strong.”

The BoE’s move comes after a growing number of commercial lenders have increased the interest rates they charge to their customers for home loans, contributing to a drop in house prices.

The injection of such a considerable sum of money into the markets could be seen as a major U-turn for the BoE as it is traditionally more conservative in its support for banks than the European Central Bank and the US Federal Reserve.

Richard Hunter, Head of UK Equities at Hargreaves Lansdown, told AFP: “It is a step in the right direction. It would already appear that the Bank of England is ready to top this up to 100 billion pounds.

“The credit crunch is of course a global problem and central banks are trying to address it locally but this particular gesture is mainly aimed at giving the UK lending market, which has clearly started to seize up, a break.”

Other analysts were more sceptical.

Martin Slaney, head of spread betting at GFT Global Markets, said: “This rescue plan has been touted as a jump-start to the lending markets but it is more likely to serve as a one-off bail-out which plugs a hole for now.

“We are a long way off from returning to a more liquid lending market where mortgages are freely available.”

The BoE said that under the new plan it would allow banks to swap their mortgage-backed securities over a period of between one and three years.

Many global banks have suffered heavy losses related to mortgage-backed securities that were effectively bets on high-risk US borrowers repaying their home loans, which many were unable to do.

The worldwide squeeze on credit has already claimed British mortgage lender Northern Rock which was nationalised in February and US investment bank Bear Stearns, which has been sold off for only a fraction of what it was once worth.

Britain’s second-largest bank, the Royal Bank of Scotland, said on Monday it would ask shareholders for a cash boost following reports that it was to announce fresh losses linked to the credit crunch and its takeover of Dutch bank ABN Amro as part of a consortium.

The European Commission said it was studying the bailout plan to determine whether it constituted state aid.