Gordon Brown, British prime minister, and President George W. Bush have agreed to step up co-operation over the crisis in financial markets, setting up a UK-US working group that will develop proposals to monitor and regulate the banking system.

At the heart of the plans, agreed on Wednesday by Alistair Darling, UK finance minister, and Hank Paulson, US treasury secretary, is a body that will comprise senior treasury and regulatory figures from London and Washington.