Bank tax rebellion: World's finance chiefs pour cold water on Gordon Brown's plan for a levy on all transactions

Gordon Brown was tonight fighting to shore up proposals for a global banking super-tax after they met international hostility.

The Prime Minister faced immediate opposition from leading countries when he opened the G20 summit with the suggestion of a tax on every banking transaction.

The Tories seized on signs of divisions within the Government over the scheme, claiming Chancellor Alistair Darling had not been adequately consulted on Mr Brown's surprise proposal.

Gordon Brown
Timothy Geithner

No way: The PM's plan was rejected by U.S. finance chief Timothy Geithner (right)

And the suggestion of a so-called 'Tobin tax' - named after the U.S. economist James Tobin - triggered outrage in the City, with one leading banking figure describing the PM's speech as 'naked politics'.

But a No10 source insisted last night the Prime Minister still backed the levy, with a possible rate of 0.05 per cent on trades.

The row overshadowed the final major G20 gathering for 2009, a year in which Mr Brown won plaudits in some quarters for his leadership of the group of top nations.

It is also the latest in a series of embarrassments and setbacks for Mr Brown, including the rising British death toll in Afghanistan and the MPs' expenses row.

Opening the summit in St Andrews in Scotland on Saturday, he insisted a 'better economic and social contract to reflect the global responsibilities of financial institutions to society' was needed.

A levy on financial transactions should be considered 'with urgency' as one of several options, Mr Brown argued.

A Downing Street source said the PM had wanted to galvanise the international community with his speech, arguing the process needed 'some shock and awe'.

But within hours of his address, top international figures expressed doubts about a levy on financial transactions.

U.S. treasury secretary Tim Geithner said it is 'not something we are prepared to support', while International Monetary Fund chief Dominique Strauss-Kahn felt it would be too difficult to enforce.

Alistair Darling and Timothy Geithner

That's how you do it: Mr Geithner also helped fix Alistair Darling's collar

European Central Bank president Jean-Claude Trichet said he was 'not personally convinced', while Canadian finance minister James Flaherty said the idea was 'not particularly attractive'.

Russian finance minister Alexei Kudrin said: 'I'm quite sceptical about such taxes. Gordon Brown is well known as the person who has been raising taxes all the time.'

Tory spokesman Mark Hoban said: 'This is embarrassing. Gordon Brown has demonstrated that he will put nothing before a cheap headline - including Britain's credibility before the world.

'How long did the Treasury know about this announcement given they dismissed it as unworkable six weeks ago?'

No10 and Treasury sources insisted Mr Darling had been fully consulted and helped to draft Mr Brown's speech.

British policymakers have not previously warmed to the idea of a Tobin tax because of their fear of driving City business overseas and problems in policing it.

But a spokesman for the PM defended the scheme, pointing out that a transactions levy was just one of several ideas to make banks pay their debt to society.

Such a Tobin tax could reap more than £400billion a year. He said: 'We didn't expect agreement on the specific solution - that will only be possible when the practicalities have been investigated.

'But the global debate on how the financial sector should repay society is well under way and the Prime Minister is resolute in his determination to agree a deal based on the principles he set out today.'

French finance minister Christine Lagarde backed the scheme, saying: 'Any idea has to take a journey before being adopted. This is a very good one. But it must be done at an international level.'

The IMF will report on several options in April, including an insurance fee on banks to build up rainy-day funds for future crises.