The move is the latest from the central bank aimed at calming troubled markets.
The Bank of England has provided another infusion of funds into the financial system.
Announced today, the move will see the Bank increasing its commitment to add £5 billion of one-day loans to the system. It will also hold a £40 billion auction for longer-term funding on Monday.
The new plan follows the further setback faced by the US government's £400 billion plan to create a "bad bank", allowing financial firms to dump their toxic assets in public hands.
Lawmakers in Congress failed to reach agreement last night, despite the presence of president George W Bush and presidential candidates Barack Obama and John McCain at talks.
However, it is hoped that the Bank of England's move will provide extra confidence among banks, as well as offering them increased access to funding. This could also have a beneficial effect on consumer loans rates, which have faced upwards pressure since the latest phase of the credit crunch began.
A rise in inter-bank lending has already led to HSBC and Barclays-owned Woolwich hiking rates - with other lenders set to follow if the crisis persists.
"Central banks continue to work together closely and are prepared to take further steps as needed to address the ongoing pressures in funding markets," the bank said in a statement.
Compare loans via money.co.uk
