The nationalised bank released its annual report for 2007 this week, where it revealed that it had taken a £471.9m impairment charge on loans and advances and unsecured loans. The bank also booked non-recurring expenses of £127m.

Roger Lawson, director of the UK Shareholders Association, said: ‘The write-offs make the numbers look a lot worse going forward. If you mark the [financial instruments] to market they look worthless, but they could be worth something in the future,’ he said. ‘The underlying profits were actually a lot better than expected.’

The writedowns row could herald further and ongoing political difficulty for the government. Shareholders are already threatening litigation over the nationalisation.

Following the release of the accounts on Monday, the government moved a step closer to appointing an accountant to calculate the value of Northern Rock after an order was put before parliament last night to start the ball rolling.

The eventual winner of the work will be tasked with calculating how much Northern Rock is worth after the government’s £25bn bail-out package has been stripped out.

A Northern Rock spokesman defended the writedowns: ‘These accounts have been fully audited. There was evidence of deterioration in markets and the impairments reflect that.’