The Bank of England has injected an extra £5bn into the money markets in an attempt to ease concerns about the liquidity of the banking system.
Bank of England governor Mervyn King has indicated for the first time that he might be prepared to give Britain's banks more help, the BBC has learned.
The loans were added to the normal weekly funds offered to commercial banks, making £11bn now available.
Mr King has told the bosses of Britain's big five banks that he is sympathetic to their requests.
The announcement came ahead of a meeting with the bosses of the big five UK high street banks.
The banks want to be able to use a wider range of collateral, including mortgages, for Bank of England loans.
The banks are understood to want the Bank of England to pump even more cash into the system.
Mr King had been reluctant to allow that so he would not be seen as bailing out banks that had behaved foolishly.
Both the European Central Bank and the US Federal Reserve have made much more money available to their banks.
"Although the Governor of the Bank, Mervyn King, asked them not to divulge what they discussed, I have learned he signalled - for the first time - that he was sympathetic to their request that in an emergency they should be able to swap a wider range of assets, including their mortgages, for loans from the Bank of England," the BBC's business editor Robert Peston said.
The Bank said an extra £5bn a week would be released at least until its next monthly meeting on interest rates on 9 April.
This week's additional funding, released on Thursday, was three times oversubscribed.
'Close dialogue'
No details of the talks between the bank bosses and Mervyn King have been disclosed, but the Bank of England issued a short statement.
"The Bank of England and the banks agreed to continue their close dialogue with the objective of restoring more orderly market conditions," it said.
The banks represented were HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS.
HBOS shares were among the top gainers on the London Stock Exchange on Thursday, up 6.2% recovering most of their falls from the previous day.
On Wednesday, the Financial Services Authority (FSA) said it would "not tolerate" traders starting "false" rumours about firms to make cash from dealing in their shares.
