The Treasury has denied reports it is planning to print more cash to tackle Britain’s credit crisis.

Chancellor Alistair Darling sparked speculation after indicating in an interview the government is considering ‘quantitative easing’ – printing more money – as interest rates move closer to zero.

In the interview with the Financial Times, Mr Darling said: “Clearly the closer interest rates come down to zero, the more the normal transmission mechanism and the operation of monetary policy has to be looked at.”

The chancellor added the Treasury and the Bank of England would have to work “hand in hand” on a decision to directly inject cash into the markets.

The Bank of England is expected to cut rates again today, which would take the figure to a historic low.

However a Treasury spokesperson said although nothing has been ruled out, a plan to print money is not on the agenda.

Printing more money would allow the Bank of England more freedom to buy up assets and was used in Japan to stave off deflation several years ago, but the plan has been criticised by the Tory party.

Shadow chancellor, George Osborne, said: “Printing money is the last resort of desperate governments when all other policies have failed.

“It can’t be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings.”