The main Australian banksr were preparing each to tip $500m of wholesale funds into the new Federal Government-backed vehicle aimed at keeping credit flowing in the commercial property sector as some struggling offshore lenders become reluctant to refinance loans.

Bankers have given their initial backing to the planned vehicle, which could be leveraged to as much a $30bn, saying it would ease pressure on bank balance sheets in the face of a complete dry-up of credit.

National Australia Bank chief executive Cameron Clyne said it was the "right time" for Australian banks to work with the Government to provide additional support for the economy, given the sector was well capitalised.

The Age