Mortgage lender Bradford & Bingley will be nationalised and its savings business sold to Spanish bank Santander, the Government has confirmed.

Shares in the company were suspended with the announcement that its £41.3 billion mortgage book was being added to the national debt

Chancellor Alistair Darling said the Government had taken "quick, decisive action" to provide economic stability and he promised that the taxpayer would be protected.

He added: "My priority was to protect savers and depositors but also to ensure we got a good deal for the taxpayer. We had to stabilise the situation in order to protect the banking system as a whole, just as we have done on previous occasions."

Bradford & Bingley, which has been battered by the credit crunch, follows Northern Rock into public ownership after attempts to sell the business failed.

The bank has 2.5 million customers and held retail deposits of £22.2 billion at the end of June - although the bank rushed to assure savers that their money was safe.

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