But a lack of detail in the package and fears it is one step from full nationalisation sent shares skidding: RBS crashed 70 percent to 10.5 pence, its lowest level for over 25 years, and shares in other banks all slumped heavily. Banks will be able to insure themselves against losses on their riskiest assets. Britain will also guarantee on their debt and set up a 50 billion-pound fund to buy up high-quality securities like corporate bonds to get cash flowing again.
With figures this week expected to confirm the economy is now in recession for the first time since 1992, the government wants the multi-pronged package to kick-start lending to credit-starved consumers and companies.
"We have seen a global banking failure. There has got to be international action to deal with this," he said, presenting the package to reporters along with Chancellor of the Exchequer Alistair Darling. In the United States, one of President-elect Barack Obama's first tasks when he takes office this week will be to figure out how the second half of a $700 billion bailout package can be administered so credit can flow again.
For Brown, the stakes could not be higher as an election is less than 18 months away. He won high praise for the country's first bank bailout last October, which was emulated around the world, but a poll on Sunday showed his popularity waning again. "What the government did the last time was supposed to work but it didn't. Hopefully it will - it's a lot of money for the taxpayer," said David Peralta, a London shopkeeper.
FURTHER NATIONALISATION? World stock markets initially cheered the bailout package but analysts were sceptical it would be enough to stop the rot of the worst financial crisis in living memory.
"We still think that the government may eventually have to set state-decreed targets for the banks to lend, perhaps via further nationalisation," said Vicky Redwood, UK economist at Capital Economics. RBS shares were ravaged by fears that more hefty losses coming through from toxic assets, mortgages and corporate loans will force to government to take it under full control.
"The UK government has made it very clear in October and again now that its preferred option is not to take into nationalisation the banks," RBS chief executive Stephen Hester told journalists. "It was discussed only as something that we all wanted to avoid." But investors were in no mood to listen and other bank stocks also tumbled. Lloyds Banking Group, already 43 percent owned by the government, fell 30 percent. The pound and government bonds also fell on the prospect of quantitative easing - literally boosting the money supply.
DETAILS SCANT Other analysts noted details of the measures were scant. "The scheme itself sounds like a step forward but there aren't a lot of details on the terms and the fees," said Simon Ward, chief economist at New Star Asset Management.
Banks also said they needed more detail. "I don't think there's any silver bullet. This could be a powerful scheme but the devil lies in the detail and if the details aren't right then it could be a damp squib," Hester said.
As part of the package, lenders would have to identify their riskiest assets which they could then insure with the government for a fee. They would still be liable for initial losses but could at least put in a ceiling, boosting confidence. It will also create a guarantee scheme for asset-backed securities starting in April that will build on the recommendations of a government-sponsored report late last year.
The Bank of England, meanwhile, gets a new 50 billion pound facility to buy high-quality assets and most strikingly will be able to use this framework to boost the money supply, so called quantitative easing, in order to boost the economy as it runs out of room on interest rates.
The central bank cut interest rates to a record low of 1.5 percent this month and, like central banks around the world, has been looking at how it can ease monetary conditions once rates cannot fall any further. Brown said the BoE would give more details on Tuesday.