Officials this morning rushed out an increase in the depositor guarantee for British savers from £35,000 to £50,000 amid growing evidence that savers were defecting to Irish banks in the wake of the country's stunning savings promise earlier this week.

The Financial Services Authority (FSA), the City regulator, announced that the compensation limit for bank deposits was being raised from Tuesday October 7. Customers with joint accounts would be eligible to claim up to £100,000 in the event of their bank or building society failing.

Hector Sants, the FSA's chief executive, said: “There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term, we have now decided to implement the move to a £50,000 limit from Tuesday."

Officials are also going to look at whether the compensation limit should be raised further and the speed at which compensation is paid out in the event of a bank collapsing, the FSA said.

The FSA is also consulting on whether depositors should be protected on a per-bank, per-brand or per-account basis.

Currently, depositors may think they are protected when they are not because the maximum only applies to all the accounts held by a depositor in a single banking group.

However, any changes on that aspect are months away at the earliest.

Mr Sants said the changes tied in with the planned introduction of a Banking Bill in Parliament next week, which is expected to give the authorites greater powers to act if banks get into trouble.

"The Chancellor has made clear that the authorities will do whatever is necessary to maintain financial stability and protect depositors," said Mr Sants.

The former £35,000 limit was introduced on October 1 after the Northern Rock debacle.

The British Bankers Association said today: "The increase in the deposit guarantee limit to £50,000 will bring welcome certainty for customers, 96 per cent of whom were already covered under the existing deposit guarantee scheme."

Irish banks have reported a surge in deposits since Dublin stunned its European neighbours by unilaterally guaranteeing all deposits for two years on Tuesday.

British bankers are furious that the Irish banks are deliberately wooing their business customers and attempting to get them to defect on the grounds their deposits are "safer".

Gordon Brown has called on Dublin to stamp out aggressive marketing by Irish banks.

The Prime Minister is due to meet other major European Union leaders and Jean-Claude Trichet of the European Central Bank tomorrow to discuss the financial turmoil at a summit convened by Nicolas Sarkozy, the French President.

Their attempts to find a common approach to the problems come after François Fillon, the French Prime Minister, said: "The world is on the edge of an abyss because of an irresponsible system.

"Nicolas Sarkozy will reiterate that the only way out of the crisis will be a collective one. He will propose that Europe make its banking systems secure, unfreeze credit and co-ordinate its economic and monetary strategy", he said.

"The state will intervene each time it's necessary to secure our banking system", he added.

Money Central: the six safest places for your savings

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge