Labour will break up Britain's "big five" banking monopoly by forcing the high street giants to give up branches and open the market to competition, Ed Miliband (pictured) promised yesterday.

Delivering a speech at the University of London, the party leader said a Labour government would impose a US-style cap on the market share that any one bank can have in personal accounts and small business lending.

If the party wins the next general election, government department the Competition and Markets Authority would be instructed to report within six months on how to create a least two new "sizeable and competitive banks" to challenge existing lenders.

Mr Miliband said: "It is not about creating new banks that control some tiny proportion of the market, but new banks that have a substantial proportion and can compete properly.

"And we are not asking whether existing banks might have to divest themselves of a significant number of branches. We are asking how we make that happen."

He added that with just four banks controlling 85 per cent of small business lending, the financial services sector had proved a "poor servant" of the real economy.

"We need a reckoning with our banks, not for retribution but for reform."

Labour MP and banking book author Michael Meacher said the proposals were the most radical made by a Labour leader for at "least 30 years."

However Mr Meacher said that he thought there was a need for a national investment bank to "channel money into key areas in the British economy" rather than the current system of the big five choking the nation's industry by refusing to lend.

He said: "The banks have 10 times the influence in terms of spending power over the British economy than the government. They have seized control of the money supply and we need to take it back."

The Green Party went further and said they were disappointed that Mr Miliband had taken "such a feeble line."

Green Party finance speaker Molly Scott Cato said: "Nothing short of determined political action to separate retail and commercial banking and the introduction of a test of social usefulness for financial products can protect society from another banking crisis."