The housing market will not see a return to the profligate mortgage lending practices of the past few years, the governor of the Bank of England insisted yesterday as he announced a massive operation to support liquidity in British banks. Financial Times

Making an almost unlimited offer to acquire UK banks' mortgage-backed securities for up to three years in return for Treasury bills, Mervyn King said the plan would 'take the liquidity issue off the table in a decisive way'. But he warned that the objective of the plan was neither to persuade banks to start lending again nor stand in the way of a housing market correction.

His stern words contrasted with those of Alistair Darling, the chancellor, who told Parliament he hoped: 'This [scheme] will help alleviate the problems that have seen banks reluctant to lend to each other and in turn support the provision of new mortgage lending.'

For the next six months, the Bank will offer to acquire assetbacked securities from banks in exchange for Treasury bills. Based on conversations with commercial banks, the Bank expects to swap £50bn assets in the first couple of months.