Chancellor Alistair Darling yesterday defended his decision to rush through emergency legislation to nationalise Northern Rock.
Mr Darling told MPs it was impossible to run a bank unless it was clear "who is in charge of that bank".
Introducing second reading of the Banking (Special Provisions) Bill, he said Ministers did not want the bank to compete unfairly with other banks, distorting competition.
He disclosed that discussions would be held on this issue with bank and building society associations before submitting proposals for state aid approval by the European Commission.
"We won't be involved in the day-today management of NR. But we do need to approve its business plan. We want to make sure it is prudent, that it's sensible, and protects the interests of the taxpayer. But also we want to make sure it avoids distortions."
Mr Darling announced on Sunday that the troubled bank was being taken into a period of temporary public ownership. Conservative leader David Cameron has urged the Prime Minister to sack the Chancellor over the debacle.
Shadow Chancellor George Osborne has branded Mr Darling "politically a dead man walking", while shareholders have threatened legal action and Northern Rock employees are braced for thousands of possible job losses as the business's operations are scaled back.
Ministers wanted to push the Bill through all its Commons stages last night, so the legislation can be considered by peers today and return for final debate by MPs tomorrow before becoming law.
The Government faced cross-party opposition as it pushed ahead with the tight timetable, which was backed by 291 votes to 223, majority 68.
Treasury Chief Secretary Yvette Cooper said it was in everyone's interests to end uncertainty over the bank's future and act as swiftly as possible.
But shadow Treasury chief secretary Philip Hammond said MPs had been expecting a "narrowly focused" measure - not a 24-page Bill, which included some "quite complex provisions" of general applicability.
"This isn't a measure targeted at dealing with NR but allowing nationalisation of other deposit takers, not only banks but also mutual building societies."
He warned: "We cannot casually hand over a blanket power to nationalise banking institutions."
Liberal Democrat spokesman Simon Hughes complained the House was being "regularly bounced" into timetables not justified by the facts and accused Ministers of treating the House "disgracefully".
Senior Labour MP Gwyneth Dunwoody joined the chorus of criticism over the timetable, branding it "indefensible" and insisting the Government was wrong to impose it on a Bill which was so large in its implications and so complex.
As debate on the Bill got under way, Mr Darling acknowledged the Bill did contain provisions which could be applicable in other circumstances, but stressed it was only being introduced because of the need to nationalise NR.
"Now that the Government has made its intentions clear, it's important that the legal ownership and the certainty of authority is given to the board as quickly as possible.
"It is impossible to run a bank unless it is clear who is in charge of that bank, who is running that bank."