Savers have been buoyed by news from the Financial Services Authority (FSA) that compensation levels will be increased to £50,000.
The change, which takes effect from October 7th, also means that customers with joint accounts will be able to claim up to £100,000.
FSA chief executive Hector Sants said: "There has been extensive debate about the compensation levels.
"In the interests of providing clarity over the minimum level for the long term, we have now decided to implement the move to a £50,000 limit from Tuesday."
The FSA is to consult on other reforms such as increasing the compensation level further and the speed at which compensation can be paid.
In related news, the Daily Telegraph reports that hundreds of thousands of UK savers have put money into high-paying deposit accounts with European banks.
However, if the banks should run into problems, UK customers could in some cases expect far less protection than that is offered by UK banks.
Savers are advised to find out whether their European banks hold a separate banking licence, which would entitle them to full cover under the Financial Services Compensation Scheme.
