Ministers say nationalisation of the bank is a temporary measure Parliamentary debate

The Banking (Special Provisions) Bill was given a third reading by 293 votes to 167 despite Conservative opposition.

The bill now goes to the Lords later, with ministers hoping it can be on the statute books by the end of the week.

It will put the troubled bank into what the government has described as temporary public ownership.

The bill will spend at least one day in the Lords, before the Commons considers any amendments on Thursday.

The decision to rush through the bill on Tuesday was criticised by some MPs, but Chancellor Alistair Darling said it was essential to "proceed quickly".

Shadow Treasury chief secretary Philip Hammond said MPs had been expecting a "narrowly focused" measure, not a 24-page bill, which he said could allow other banks and mutual building societies to be nationalised.

Liberal Democrat Simon Hughes accused ministers of treating the Commons "disgracefully".

The chancellor said the bill could be used only in "very defined and exceptional circumstances".

"It is impossible to run a bank - let alone any other company - unless it is clear who is in charge of that bank," he said.

Liberal Democrat support for the emergency law means it is likely to be approved.

An independent figure will then be appointed to value the bank's shares and decide how much compensation shareholders will get.

The action comes after the bank ran into problems last autumn amid the US sub-prime lending crisis and the global credit squeeze.

Ministers opted for public ownership of Northern Rock after rejecting a bid from a consortium led by Sir Richard Branson's Virgin Group and a proposal from the board of Northern Rock.

'Protects taxpayer'

Taxpayers are subsidising the bank in loans and guarantees to other lenders to the tune of about �55bn, which will rise to �110bn under the new strategy, equivalent to �3,500 per taxpayer.

Mr Darling told the Commons: "We are proposing a course of action that will maintain financial stability.

"It will support the savers and it also gives a chance for this company to refocus and restructure. It is also a proposal that protects the taxpayer."

He said that while ministers would not be involved in the day-to-day running of Northern Rock, they would need to approve its business plan.

Shadow chancellor George Osborne said the Conservatives supported an alternative plan of Bank of England-led administration and said the government was writing "a huge blank cheque".

"Not only do we not know what we are paying for this bank, we don't know what we are buying into," he said.

"The government simply refuses to tell us how risky this exposure is."

He accused the government of avoiding the word "nationalisation", adding: "It has become the policy that dare not speak its name."

Competition questions

But Labour's Newcastle MP Jim Cousins accused the Tories of wanting a "rapidly managed run-down" of the bank.

Lib Dem Treasury spokesman Vincent Cable raised concerns about the "very messy area" of competitive principles in relation to other banks.

"What is the kind of deposit interest rate that can be offered? Can it offer a higher rate of interest in attracting deposits or the same? How is it going to be constrained. What are its lending practices going to be?" he asked.

The running of the bank and any restructuring will now be the responsibility of City trouble-shooter Ron Sandler, who will be paid �90,000 a month and, it has emerged, is a non-domiciled taxpayer.

BBC business editor Robert Peston said Mr Sandler had lived and worked in the UK since the mid-1980s, paying UK tax on what he earns here, but he was brought up in Zimbabwe, has a German passport and holds assets overseas.

And the woman he has chosen as his �75,000-a-month chief financial officer, Ann Godbehere, is resident for tax purposes in Switzerland and is also likely to adopt non-dom status.

The government is currently targeting non-domiciled taxpayers - people who live in the UK but who say their real home or "domicile" is elsewhere and pay no UK tax on their overseas earnings.

A Treasury spokesman said they would be "very relaxed" if Mr Sandler had the non-dom tax status.