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Strengthening depositor protection and dealing with banks in difficulty form the main focus of the Banking Reform Bill in a series of proposals aimed at promoting resilience in the financial system.

In a clear signal that the government wished to avoid a repeat of the Northern Rock situation, Gordon Brown put forward measures allowing banks to borrow from the Bank of England secretly on a short-term basis.

He also suggested the introduction of a "special resolution regime" which would allow the Tripartite authorities to intervene in the event a bank gets into severe difficulties. The measures put before the House of Commons also included an insolvency regime for banks.

The Bank of England would also be provided with a financial stability objective, amending the size and composition of the bank's court.

In other areas, the Financial Services Compensation Scheme would be modified to enable bank depositors to be paid more quickly and efficiently in the event of a bank becoming insolvent.

Further proposals also look towards strengthening the arrangements underpinning banknote issuance by commercial banks in Scotland and Northern Ireland. The government concluded holders of bank notes issues by these institutions would be better protected if the issuing bank became insolvent.

Elsewhere, revisions will be made to the memorandum of understanding, introducing new mechanisms for co-ordination between the tripartite in times of crisis.

The government will issue a further consultation on this area, including the publication of draft clauses before the summer recess on 26 July.