Banks may be forced to agree targets for cutting the number of families without basic accounts, according to the Treasury.

Financial secretary Stephen Timms said he hoped a voluntary agreement could be reached but signalled that legislation was still an option.

However the Conservatives said banks should be legally required to open accounts for the UK's estimated two million households that do not have access to basic banking services.

Tackling financial exclusion is one of the chancellor's priorities and new measures are expected in next month's pre-Budget report.

A special fund may be established to tackle financial exclusion and some rules on ID relaxed.

Ministers believe the basic bank account is a key way of tackling exclusion, but some believe that banks are not always making it easy enough for people to open them.

Challenge

Setting out Treasury thinking, Timms said: "We said we did want to work with the banks to agree a challenging target for reducing the number of people who don't have a bank account. - 1.9 million households at the moment - about 1 in 12 of all UK households don't have a bank account of any kind.

"We want to see that number substantially reduced. I`m pretty confident we will be be able to draw up a target that the banks and we can work jointly to achieve but... of course legislation is always a possibility.

"I don't think we are going to need it but if we did, that possibility would always be there."

However the Conservatives' City envoy, Howard Flight, criticised the government's approach.

"The real objection to what is going on, and which I regard as almost fascist, is actually for government to using its potential leaning powers behind the scenes improperly," he said.

"The idea of basic bank accounts has quite a lot of sense to it in today's world, but if that's what the government wants to do, the open rather than the deceitful approach, is to legislate, as applies in France, that banks are obliged to open an account for everybody," he added.