"We welcome this package - any moves to improve confidence in UK banking and the UK housing market are welcome.
"We believe the asset protection scheme should, as a matter of principle, be made available to all building societies, just as the earlier Government recapitalisation measures were - even though it is unlikely that societies will need to resort to it.
"We also hope that the forthcoming Budget will include measures to support the flow of retail funds into deposit takers, given the support for wholesale funding announced today.
"Northern Rock bank has announced that it is slowing its rate of mortgage redemptions. We await its detailed plan, but would have concerns if Northern Rock bank were to aggressively increase its lending, particularly if this was to be funded by retail savings - a market in which we are already concerned about unfair competition from Government-backed entities."
Legal & General’s mortgage director, Ben Thompson, said: "The plan to offer banks insurance on their riskiest assets should at least provide some reassurance that things can only get so much worse. The timing of this move to reduce uncertainty about the value of past investments feels more appropriate than when it was first mooted some months ago. Since that time, asset prices have dropped significantly and interest rates have reached a record low. This is the first time since this crisis began that it has been realistic to set the ceiling on losses. Whilst we look forward to more credit becoming available to consumers, it needs to be at a sensible flow. High LTV lending costs more for lenders bit this is the area that will come to life when lenders want to start rebuilding market share again. Arguably, it is one of the areas that needs most attention."
Richard Lambert, the CBI's Director-General, said: "This is a momentous day - but extraordinary times demand extra extraordinary policy solutions.
"The viability of ordinary businesses was under threat, putting jobs and investment across the land at risk. The Government needed to be bold and it has been.
"These measures are the essential pre-cursors for economic stability which will expand the availability of credit, open new channels of credit and get the economy working again.
"These measures are not silver bullets that will turn the economy around overnight. However, if fully implemented they should stem a further downward recessionary spiral and provide a stable economic platform on which the UK can trade through this difficult period."
