The Banking Reform Bill announced today is based on recommendations made by the Independent Commission on Banking set up by the government in 2010.
The government said these reforms would "foster financial stability and a more resilient banking sector” and ensure retail depositors are paid out before unsecured creditors if a bank collapses.
Which? executive director Richard Lloyd supported the move.
He said: “People can’t afford to lose money on bailouts and want their savings to be protected from risky investment banking.
“The Bill should set out a clear and urgent timetable for reform and the Government must not allow this to be de-railed by bank lobbying.”
Lloyd said the government must also promote choice on the high street.
And he added: “Without strong action, consumers will continue to pay the price for a lack of competition.
“The Government must make sure that the competition recommendations of the Vickers Report are fully enacted.”
The British Bankers’ Association said it remained concerned about a number of areas and would seek to ensure that transition between regulatory authorities is implemented efficiently and effectively.
A spokesman for the trade body added: "The banking industry has already made huge progress towards strengthening the financial system. It has moved first and furthest in making these changes. UK banks are in a stronger position than any of our international competitors having started three years ago to increase substantially capital levels.
“Much of the ICB agenda is already underway by other means, such as recovery and resolution plans which ensure that, if a bank hits a problem in the future, it has a programme in place to deal effectively and swiftly with the problem without causing problems for customers.
"Both UK authorities and the banks believe that no bank is now too big to fail.
“Banks are committed to working with the government on effective reform. A well-functioning banking industry is essential for a modern economy and any changes will have knock–on effects for the whole economy. It is vital for everyone we work together to ensure the ring fence is in the right place.”
The Queen also announced measures to try to boost economic growth including scrapping some regulation on businesses under the Enterprise and Regulatory Reform Bill.
The government said this would "create the right conditions for economic recovery".
