Chancellor Alistair Darling says the government will do whatever necessary to ensure stability of the financial system.
He said that would include action to support the banking system as a whole as well as supporting individual banks.
The chancellor told MPs that European countries needed to work more closely together on responding to the crisis.
His statement came as stock markets worldwide plunged on concerns about the health of the banking sector.
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"When member states take unilateral action, it does have a knock-on effect," he said.
Mr Darling told the Commons that an emergency meeting would be held in Luxembourg on Tuesday, where he hoped that all member states would agree to act together to avoid confusion.
(BBC)
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