The chancellor Alistair Darling will soon announce a multi-billion pound package to help banks lend businesses more money, the Times has learnt.
Companies, many with commercial property assets that have fallen in value, should then be able to borrow more cash to keep their business moving.
According to the paper, the initiative will be launched next month and Mr Darling is considering introducing a national lending scheme.
Such an incentive would see the government guarantee new lending and underwrite up to 80 per cent of the risk involved.
The flow of credit is essential in keeping businesses competitive – it helps firms invest, research and prepare new products.
The Confederation of British Industry has warned that until credit flows have been improved “eeconomic activity cannot begin to recover”.
Its director general Richard Lambert noted that without it “healthy companies will face increasing difficulties, and some will struggle to survive”.