Chancellor Alistair Darling has warned it would be "irresponsible" to rule out temporary nationalisation of Northern Rock as he outlined the Government's rescue plan.

Mr Darling told the Commons it had proved impossible for Northern Rock to find a "purely commercial solution" and there was "no chance" of striking a deal backed entirely by private finance in the near future.

He said ministers' preferred solution of converting NR's £25 billion Bank of England loan into bonds for selling off to investors offered the best hope of maintaining financial stability.

But temporary public ownership, or "nationalisation," remained an option and legislation to deal with the possibility was being prepared.

Shadow chancellor George Osborne complained that the loans and guarantees amounted to a £2,000 "second mortgage" for every family in the country to "rescue the reputation" of the Government.

He also argued that no British Government had ever provided taxpayer support on this scale to a private company.

Mr Osborne added:"It's bigger than British Leyland, bigger than British Steel. This is back to the 1970s. Life in Brown's Britain is like an episode of Life on Mars," he said.

Earlier, Virgin boss Sir Richard Branson said his group's bid for Northern Rock would see the taxpayer recoup nearly £30 billion in loans.

Sir Richard, speaking in the Indian capital New Delhi where he is accompanying Prime Minister Gordon Brown on an official visit as part of a business delegation, said he had yet to see the fine print of a Treasury announcement about proposals for the bank's future.

But he said: "Superficially we are happy. Sir Brian Pitman, chairman of the Virgin Bank will be examining it over the next two weeks.

"We will put our best foot forward in two weeks' time and obviously we hope we are successful.

"I haven't seen the details of the package. We believe from what we have seen that the package is workable and it should be possible for a private consortium like the Virgin Bank to make a go of it, but obviously we need to see the small print."

Asked what he was offering, Sir Richard said hundreds of millions of pounds would be involved and added: "We are putting our Virgin brands and our reputation in.

"The important thing from the taxpayers' point of view is that all the money that has been loaned to Northern Rock is paid back.

"We believe that will be possible and we believe most jobs will be saved."

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