Royal Bank of Scotland Plc said it will give homeowners who miss mortgage repayments at least six months before starting repossession action - that’s double the three month period the bank used to give.

The policy will remain in place until at least the end of 2009 and applies to all customers including those already behind on repayments.

Last week the British government bought a 58% stake in RBS, which also owns NatWest, at a cost of £15bn plus £5bn worth of preference shares.

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Stephen Hester, RBS’s new chief executive, told the Financial Times: "We need to cut costs, to reduce our own borrowing and, yes, that means reducing some of our lending too.

"But along the way, we need to recognise our customers’ needs and fulfil them where we can. Not because of any moral pressure – although we understand it – but because it makes commercial sense."

Speaking to the Observer newspaper, Chancellor Alistair Darling, said: "You know they [the banks] are getting something from the government. They have to realise that the taxpayer’s going to get something in return."

The news has been welcomed by Citizens Advice and the charity Crisis, who represent homeowners struggling with arrears.

(GK/KMcA)