The Conservative Party has echoed US moves to scrap mark-to-market accounting in a shock move this afternoon.

Fair value accounting would be dropped for three months under the radical plans.

David Cameron's party said that it would push the government to suspend the 'mark-to-market pricing within banks that causes a vicious cycle of write-downs and falls in asset values.'

Under the propsals, banks should price their assets at the value they expect to get out of them over the long term, which would help abate the downward spiral.

'In normal times [mark to market] is sensible as it forces banks to value their assets against an objective price. But when the market is clearly not functioning properly, it can create a vicious circle as falls in valuations trigger falls in valuations of other assets too. Asset prices can fail to reflect the long-term reality.'

The value banks attribute to their own assets would also have to be audited, the Conservative added.

'Banks must continue to reflect the value of their assets. Suspending marking to market will help us get through the crisis.'