Chancellor Alistair Darling and Housing Minister Caroline Flint are to meet mortgage lenders later today to discuss ways to help homeowners to survive the credit crunch.

The Bank of England has launched a scheme to allow banks to swap temporarily their high quality mortgage-backed and other securities for UK Treasury Bills.

Under the Scheme, banks can, for a period, swap illiquid assets of sufficiently high quality for Treasury Bills. Responsibility for losses on their loans, however, stays with the banks. By tackling decisively the overhang of assets in this way, the Scheme aims to improve the liquidity position of the banking system and increase confidence in financial markets.

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Mervyn King, Governor of the Bank of England, said: "The Bank of England's Special Liquidity Scheme is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks."

The asset-swapping scheme was criticised in some quarters as a bail-out exposing taxpayers to losses in the event of another Northern Rock-style banking collapse.

Usage of the scheme will depend on market conditions. Discussions with banks suggest that use of the scheme is initially likely to be around £50bn.

(CD/JM)