The European Union (EU) gave green light on Tuesday to British package to bail out its struggling banks and stabilize the financial markets.

The package, worth half 1 trillion pounds (about 880 billion U.S. dollars), will provide new capital to eligible banks and building societies, guarantee short and medium term debt to encourage inter-bank lending and offer liquidity to banks under strict conditions.

The European Commission, the EU's antitrust watchdog, found the measures to be compatible with EU state aid rules, because they were an appropriate means to remedy a serious disturbance in the British economy while avoiding unnecessary distortions of competition.

"The package provides for non-discriminatory access, is limited in time and scope and contains safeguards to avoid the abuse of the scheme," the commission said in a statement.

In a bid to ease the credit crunch amid the financial crisis, the British government announced the ambitious package last week, which would use 50 billion pounds to partly nationalize major banks, make available 200 billion pounds in short-term loans and guarantee a further 250 billion pounds of bank loans.

(1 U.S. dollar = 0.5682 pound)

(Xinhua News Agency October 15, 2008)