Chancellor Alistair Darling has addressed the Commons over plans to nationalise troubled mortgage-lender Northern Rock.

To jeers from Tory MPs, Mr Darling said the process will begin its passage through Parliament on Tuesday and that he will "shortly" publish the framework agreement outlining how the relationship between the Government and bank will work.

Mr Darling said Northern Rock will be put into temporary public ownership after two private sector offers to save the beleaguered bank did "not provide best value for the taxpayer".

He said the new board and the bank will "operate at arm's length from the Government, with commercial autonomy for their decisions".

Shares in Northern Rock were suspended early on Monday after the previous day's surprise announcement when proposals from Sir Richard Branson's Virgin Group and Northern Rock's own management team were revised and rejected.

In response to Mr Darling, shadow chancellor George Osborne said the Chancellor had been the "undertaker" presiding over the "slow, lingering death of Northern Rock and Britain's reputation as a major financial services centre".

Mr Osborne said the Chancellor will never recover his reputation for competence and that he is "politically a dead man walking".

Earlier, Northern Rock's new boss, Ron Sandler, described the nationalisation of the bank as "a chance to pull back".

Mr Sandler will be paid £90,000 a month for taking on the role, while Ann Godbehere - former chief financial officer of insurance giant Swiss Re - will join his team as chief financial officer on a £75,000-a-month salary.

During a visit to Northern Rock's Newcastle headquarters, he said: "I want to reassure staff that the process of temporary public ownership is a good thing. It gives the bank a period of stability and a chance to pull back from some of the forces that have buffeted it in previous months."

He has confirmed that the bank would continue to operate under the Northern Rock branding and be run as aggressively as is possible under EU state aid rules. Mr Sandler said he believed it would be "some years" before the Government loans were repaid in full.

Prime Minister Gordon Brown has said the decision to nationalise the troubled mortgage lender is in the best interests of the taxpayer.

He said the Government had isolated the problems at the bank and protected savers' deposits, adding that ministers had taken the right decisions, at the right time, for the right reasons.

"Given that both bids that came forward involved a subsidy from Government without an appropriate level of return for taxpayers, after detailed consideration and independent advice, the Chancellor concluded that the right decision is to hold Northern Rock in temporary public ownership, to be run at arms length from the Government under professional management until market conditions change," he said.

This time last year, the bank was worth £5.3 billion. When the bank's shares were suspended, they were worth just £375 million.

© Independent Television News Limited 2008. All rights reserved.