Alistair Darling has defended the government's handling of the Northern Rock crisis, but has accepted that changes to Britain's system of banking regulation may be needed.

Giving evidence to the Commons Treasury committee, which last week quizzed executives from the troubled bank, the chancellor said he accepted full responsibility for the current system of financial monitoring.

Under existing 'tripartite' arrangements, the Treasury, the Financial Services Authority and the Bank of England each have a role to play in ensuring financial stability.

But that system has been criticised for failing to prevent panic withdrawals from Northern Rock last month.

The chancellor said he had first heard that Northern Rock "might have a problem" on August 15.

The FSA had sought to help Northern Rock raise extra funds in the financial markets.

"It was by no means certain that all was up with the bank," Darling said. "Extensive efforts were made to resolve the problems at the Northern Rock. It was not for want of trying."

Darling also renewed his call for more transparency in the accounting practices of banks.

"There needs to be better regulation to stop banks hiding things off-balance sheet," he told the MPs.