Lloyds TSB, one of the UK's biggest High Street banks, is to offer customers more than 3% interest on its main current account.

The move is the latest instalment of a price war among banks to attract new customers.

This is good news for our customers and will allow us to grow our business even further Eric Daniels Lloyds TSB

However, Lloyds TSB current account customers will have to apply to move to the new high rate account instead of being moved automatically by the bank.

Lloyds TSB will be offering up to 3.2% annual interest on current accounts from 10 February.

Register online

Under the new current account 'Plus', all current account customers paying in more than �1,000 a month can upgrade online to receive interest on their account.

Customers paying in more than �2,000 a month will receive 3.2% interest, while those paying in �1,000 or more will receive 2.53%.

However, customers not making the online switch can expect to receive only a fraction of this interest.

"This is good news for our customers and will allow us to grow our business even further by attracting new customers looking for excellent value and accessibility," said Eric Daniels, group executive director of UK retail banking at Lloyds TSB.

However, Stuart Cliffe chief executive of the National Association of Bank and Insurance Customers (NABC) told BBC news Online that Lloyds decision to only allow applications over the internet was discriminating against many customers.

"It is unacceptable that banks impose a two value system on customers - if you have an internet connection your quids in if not you lose out," he said.

Halifax move

In December, Halifax bank - part of HBOS - sparked a price war when it said it would pay 3.04% interest to customers paying in �1,000 a month into a current account.

The move was widely seen as a bid to snatch market share from the "big four" banks - Lloyds TSB, Barclays, Royal Bank of Scotland/Natwest and HSBC - which control most of the UK current account business.

Lloyds TSB is the first big four bank to react to the Halifax move, but industry experts say the others are likely to follow.