The UK Government has decided to take full control of troubled mortgage lender Northern Rock, in a surprise move that reflects the depth of the global credit crisis and represents an embarrassment for Prime Minister Gordon Brown.

After a tense weekend of last-minute negotiations with two bidders - a consortium led by entrepreneur Richard Branson's Virgin Group. and Northern Rock's own board - the government decided that it could best serve the interests of taxpayers and consumers by "temporarily" nationalising the bank, Chancellor of the Exchequer Alistair Darling told a hastily called news conference yesterday. He said the government would introduce the necessary legislation this morning, and that a new management team led by former Lloyd's insurance market chief executive Ron Sandler would assume operational control of the bank immediately.