Lloyds TSB customers will be paid interest from the moment they pay cheques into their current accounts in a move announced by the bank yesterday .

The initiative is the first by any UK bank and means that all personal current account customers will receive immediate interest on cheques up to #1,000, as well as instant access to the cash.

Also, customers with overdrafts will be able to reduce the amount of interest they are paying, as soon as they pay in a cheque.

It means that customers stand to receive more than 150 days' extra interest every year.

Last year they paid in more than 55 million cheques worth #32 billion.

The move by Lloyds TSB follows growing criticism of the length of time it takes the clearing banks to process cheques.

Delays earn the banks millions of pounds in extra revenues while depriving customers of interest.

Terri Dial, the bank's UK director of retail banking, said: "Customers feel cheated when they pay in a cheque and don't earn interest straight away.

"From today, our customers stand to earn over 150 days' more interest and we invite people who are losing interest in their bank to switch to us.

"Listening, understanding and responding to what our customers want is how we plan to run our business."