THE Bank of England will unveil today a plan to swap government bonds for commercial banks' mortgage debt in an effort to unblock the home loan market and ease the effects of the credit crunch on consumers.

Pressure had been growing on the British government and the central bank to do more to resolve a mortgage debt crisis threatening to slam the brakes on the economy.

"The bank will be making money available to the British banking system ... the idea behind it is it will open up the market and begin the process of opening up the mortgage market," Finance Minister Alistair Darling said yesterday.

The Treasury and the BoE have declined to comment on details of the plan but local media suggested the package involved swapping 50 billion pounds (US$99.80 billion) of government bonds for mortgage-backed securities.

Britain's Sunday Times newspaper said the arrangement was intended to run for just over a year and would involve imposing a "haircut" on the securities the BoE takes on to its books - valuing them at a discount.

The move would free up bank balance sheets and allow banks to lend more to consumers suffering the effects of an economic downturn, with falling house prices and soaring oil and food prices.

Figures last week from the British Retail Consortium showed like-for-like sales in British shops fell for the first time in two years and at the quickest rate in almost three years last month as consumers cut back on demand for luxuries like electronics.

The global credit crunch which follows a slump in the United States subprime mortgage market left UK banks wary of lending to each other or offering new home loans, and led to the forced nationalization of mortgage lender Northern Rock this year.

Royal Bank of Scotland is expected to announce a share issue this week in a move which analysts believe could raise over US$20 billion. It could also lead to similar calls on shareholders by other UK banks to shore up their balance sheets.

Prime Minister Gordon Brown and his ruling Labour party still face an uphill battle convincing voters the government can deal with the effects of the credit crunch.

Labour politicians have expressed unease about Brown's decision to scrap the 10 pence tax band, a move that could leave millions of the poorest Britons worse off.