Chancellor Alistair Darling says the government will do whatever necessary to ensure stability of the financial system.
He said that would include action to support the banking system as a whole as well as supporting individual banks.
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His statement came as stock markets worldwide plunged on concerns about the health of the banking sector.
Despite pledges being given by some European Union countries, Mr Darling stopped short of guaranteeing all bank savings and called on EU members to co-ordinate action.
"When member states take unilateral action, it does have a knock-on effect," he said.
Mr Darling told the Commons that an emergency meeting would be held in Luxembourg on Tuesday, where he hoped that all member states would agree to act together to avoid confusion.
(BBC)
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