Three of Britain's most popular high street banks are to receive £37 billion of taxpayers' cash in one of the UK's biggest nationalisations.

In return, Chancellor Alistair Darling has secured a say in bonuses paid to top executives and assurances that lending to small businesses and homeowners will start moving again.

Royal Bank of Scotland (RBS) will get £20 billion of new capital through a Government-guaranteed £15 billion share issue and a £5 billion Government cash injection, while HBOS and Lloyds TSB is getting a £17 billion handout. Barclays intends to raise £6.5 billion without Government help.

Lloyds said it was revising the terms of its acquisition of rival HBOS, and the combined HBOS and Lloyds TSB entity is expected to be around 40 per cent Government-owned once the merger is complete. RBS will be in the region of 60 per cent, although this depends on the take-up of shares.

Mr Darling also announced that he will lend stricken Icelandic bank Landsbanki £100 million in a bid to ensure UK creditors will get their money back.

The European Commission later formally approved the British bailout schemes along with a similar move in Ireland - and described Mr Brown's plan as "innovative and well designed".

In return for the cash, Mr Darling said there would be no boardroom bonuses paid at banks in which the Government took shares and that the Government was appointing three directors to the RBS board and two to Lloyds TSB.

He said: "There will be restrictions on what happens on boardroom pay and we are also getting guarantees in relation to increased lending to businesses, as well as to mortgages too."

Shadow chancellor George Osborne confirmed the Tories will support the Government in getting legislation through Parliament but said voters will be concerned the Government has committed itself to borrowing £11,000 for every UK household.

Mr Darling said: "It is necessary because we are going through quite extraordinary circumstances the world over."

Prime Minister Gordon Brown said the bail-out was "unprecedented but essential for all of us".

As part of the deal, RBS's under-fire boss Sir Fred Goodwin, who asked investors for £12 billion earlier this year to help shore up the group's balance sheet, will step down along with chairman Sir Tom McKillop. He will be replaced by Stephen Hester, currently chief executive of British Land.

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