Alistair Darling today pledged to do “whatever is appropriate” to save the banking system after the collapse of Lehman Brothers.

As many as 5,000 City jobs could be lost as a result of the investment bank filing for bankruptcy and the world’s financial markets have been stunned by the failure – with the biggest falls on Wall Street recorded since September 11th 2001.

Speaking on BBC Radio 4′s Today programme, Mr Darling said: “It has been fairly obvious, banking system going through difficult times.

“[However,] I am confident we will get through it.”

He added: “Uncertainty is affecting all countries, but on the positive side we will do everything we can to maintain stability in financial system.

“I will do whatever is appropriate and whatever is right to ensure the financial system.”

The chancellor said the government would step in if any bank’s failure created a systemic risk to financial stability.

Mr Darling also called on greater openness and transparency in investments so banks know what they are investing in and said regulators were looking at those who could be exploiting to falls in profits prices, after suggestions hedge funds had manipulated falls in some financial stocks.

“It is inevitable after failure of an investment bank, there is bound to be turbulence,” he told the Today programme.

But together with the Financial Services Authority (FSA) he was “anxoius to stop the situation where people manipulate markets”.