Alistair Darling has announced plans to give the Financial Services Authority greater powers to step in if another bank suffers similar problems to Northern Rock.
The Chancellor of the Exchequer said legislation will come into force which will allow the FSA to seize and protect customers' cash if their bank gets into difficulty.
It is hoped the new legislation will increase customer confidence, avoiding another run on the bank like that seen at Northern Rock branches in September.
"I want to make sure our own legislation is up to the mark in dealing with problems when they arise in future," Mr Darling told the Financial Times.
He said the new legislation will address "gaps in the law" and will include giving the FSA and Bank of England greater powers to get information from banks about their finances.
Mr Darling said banks are currently treated no differently from any other corporation or institution if they get into trouble and insolvency laws make it "quite difficult" to move quickly if there is a problem.
He said he will outline a clear guarantee scheme so depositors know how much of their money is protected but also will make sure they can withdraw their cash quickly.
The government has been looking at systems in America, Canada and Belgium where regulators can appoint someone to help if "trigger points" are reached when an institution is in trouble and needs support, the Chancellor said.
"The trigger points that I have in mind is that once a bank is in financial difficulties, once a bank is using lender of last resort facilities, people know what the rules of the game are at that point.
"You have to be very clear to the people not just in this country but across the world. They need to know what the rules are. It needs to be clearly defined."