British Prime Minister Gordon Brown has said that the decision to nationalise Northern Rock was the right move at the right time for the right reasons.
Brown was speaking at a Downing Street briefing, after the news broke on Sunday that the struggling mortgage lender would be nationalized.
At the briefing the Prime Minister said that We will have and always will put the interests of taxpayers first.
The Government had been hoping to find a private sector buyer for Northern Rock. Two rival bids were put forward to save the company, one an in-house bid from Northern Rock, the other a bid from Sir Richard Branson's Virgin group.
However Chancellor Alistair Darling said that neither of the offers gave taxpayers, sufficient value for money.
Speaking to the BBC, Darling said, We had independent advisers look at this, and they all pointed in one direction: the best thing to do was to take the bank into a period of temporary public ownership before ultimately trying to return it to the private sector,
Shares and trading in shares in Northern Rock have been suspended. Emergency legislation will be introduced to bring Northern Rock into public ownership.
The government has given assurances that business will continue as usual at Northern Rock branches and that Northern Rock customer's savings will continue to be guaranteed by the Treasury.
The Shadow Chancellor, George Osborne has said that the decision to nationalise Northern Rock is catastrophic and that he and the Conservative party will oppose it.
The move has also angered shareholders in Northern Rock. Although shareholders in Northern Rock are entitled to compensation it is likely that any compensation will be small as it would be based on Northern Rock's value without government guarantees.
Roger Lawson, chairman of the Northern Rock Shareholders Action Group has said that there were good grounds for legal action, reports the BBC.
He added, We've already considered it and obviously SRM - who are one of the major institutional shareholders - have effectively promised legal action already if nationalisation went ahead.