In a bid to enable the Financial Services Bill to reach the statute book before the election the government has also sacrificed its plans to allow consumers to band together to bring so called "class actions" against financial firms.

The Council for Financial Stability (CFS), which would have brought together the Bank of England, Treasury and Financial Services Authority, was one of the centrepieces of the Bill and is already operating in shadow form.

Lord Myners said the sections that would be removed were "casualties" of the "wash-up" process which sees bills with cross-party agreement rushed through before the dissolution of Parliament.

He said: "The government continues to believe that all these provisions are necessary, sensible and desirable.

"However, in the interests of securing other important elements of the bill on which greater consensus exists the government has agreed to withdraw them."

The bill, which aims to strengthen financial regulation, is being rushed through the Lords. Peers last night agreed to remove the sections which relate to class actions and Lord Myners said that the government would table amendments so that the plans for the CFS could be axed today.

Labour's Lord Whitty, the chairman of Consumer Focus, spoke of his "complete dismay" at the class action plans being dropped in an "arbitrary way" as a result of agreement between the front benches. He said it would have been "very popular and a very effective".

He added: "It will be difficult to explain why of all the elements in this bill the one that sought to redress the balance between consumers and the banking system should have been picked upon by the Conservative Party to insist on deletion."

Pre-election wash-up sees Financial Services Bill lose its edge