Barring any last minute hitches, Chancellor George Osborne will announce the details of the long awaited Project Merlin deal, after Prime Minister's Questions today.

The project, led by John Varley, the former head of Barclays, and Chancellor George Osborne, is an attempt by the banks to put an end to "banker bashing" and establish a stable environment for the sector.

The government has been seeking assurances that controversial bonuses, which are expected to total £6bn this year, will be moderated and that lending, particularly to small businesses, will be increased.

Banks are expected to agree to lend about £190bn to small and medium-sized firms this year and to reveal more about the salaries of top earners.

Last year banks loaned about £175bn to smaller businesses and the government wants a commitment that this will increase.

The agreement is also expected to include support the government's so-called Big Society Bank, providing finance for medium-sized businesses in economically disadvantaged parts of the country.

In return, the government will pledge to create a stable, predictable environment for banking.

However, it is not clear how lending will be moderated or if the terms of the agreement were be binding.

HSBC, Barclays, Royal Bank of Scotland and Lloyds Banking group are all on board for the Project.

However Santander, which owns Alliance and Leicester and part of f Bradford and Bingley - said last month it would go it alone in its talks with the government.

Tuesday's decision by the government to increase a levy on banks, taking a further £800m from banks left bank bosses "livid", although Osborne said that he made the move in order to "clear the way" for Project Merlin to be agreed.