Mumbai: The UK government has abandoned attempts to find a private sector buyer for the ailing Northern Rock bank and instead decided to nationalise it.

The government on Monday moved legislation to make the bank public - the first major nationalisation in Britain since the early 1970s. The opposition Conservatives and shareholder groups, however, opposed the move.

Finance minister Alistar Darling said nationalisation was the best option at the moment for protecting taxpayers, adding that it would be temporary and the bank would be returned to the private sector when markets stabilised.

Northern Rock, once UK's fifth-largest mortgage lender, has borrowed some 25 billion pounds ($49 billion) from the Bank of England since its business collapsed amidst the global credit crisis last year.

"Market conditions will improve. Northern Rock's mortgage book is good but I think it would be a mistake for us to abandon this asset and take a loss now," Darling said.

"We had to intervene here, because if we let this bank fail there was every chance ... the problems would have spread into the wider British banking system," he said.

A consortium led by billionaire Richard Branson's Virgin Group had been ahead of the bank's management team for acquiring Northern Rock. However, both offers fell far short of the bank's net worth, Darling said.

"In the current market conditions, we do not believe the two proposals deliver sufficient value for money for the taxpayer," Darling said.

Ron Sandler, a troubleshooter who rescued Lloyd's of London from the brink of collapse, will now head Northern Rock. Former Swiss Re executive Ann Godbehere will be chief financial officer.

The UK Shareholders Association, meanwhile, pledged legal action to try and halt the nationalisation, saying investors in Northern Rock were having their property "confiscated".

"We will not accept the transfer of this company to a third party after some temporary nationalisation from which that third party will subsequently make substantial profits," it said.

Northern Rock debacle already cost taxpayers 25 billion pounds ($49 billion) and has added around 90 billion pounds to public debt. It also became a major headache for the Labour government, which had promised to be the guardian of Britain's financial stability.