The Office of National Statistics has classified Northern Rock as a 'public financial corporation', bringing its £90bn debt onto the UK's balance sheet.

The move will be humiliating for the government, threatening as it does to breach government rules on indebtedness.

The reclassification is backdated to October 9, when the Bank of England made all of the stricken bank's assets its collateral for its lending.

The ONS said: 'The decision is in line with international statistical guidance. It should not be confused with "nationalization", which is a term commonly used to refer to public ownership.'

Since the Bank of England is required for the bank to make major decision, it must be on the public balance sheet, the ONS said.