Ananova:

The Treasury is to lend £800m to a compensation scheme for Britons with deposits in failed Icelandic bank Landsbanki.

In a statement, Chancellor Alistair Darling said it will advance the money to the Financial Services Compensation Scheme.

The cash will be used to help people who saved with Icesave, Landsbanki's internet savings arm.

Around 300,000 British savers had about £4bn worth of deposits in Icesave.

They included small and big businesses and dozens of local authorities.

Icesave suspended operations on October 7 and stopped customers from withdrawing or depositing money.

Iceland's economy is in deep trouble after its three heavily-indebted banks collapsed, due to credit problems, and its currency sank.

Britain has used anti-terrorist laws to freeze the assets of Icelandic banks in the UK.

This has sparked a major diplomatic row between London and Reykjavik.