The Treasury’s scheme to ring fence toxic loans made by British banks is likely to involve more than £400bn of assets being insured by the taxpayer, according to The Sunday Telegraph.

Although the details of the scheme announced last month are still being finalised, submissions from Royal Bank of Scotland and discussions with Lloyds Banking Group suggest that the total value of assets that will ultimately be included in the scheme will be significantly larger than the original estimate of £200bn.

Sources close to the Treasury emphasised last night that the size of the scheme would not necessarily increase the risk to the taxpayer if portfolios of relatively healthy assets were also insured as part of the Treasury’s plan to release capital to allow banks to lend more freely.

Sunday Telegraph