After discussing the idea with its major shareholders, and assessing “the potential benefits and costs” of participating in the scheme, Barclays has decided that, “it would not be in the interests of its investors, depositors and clients”.

Barclays said last week that it expected its capital position and resources to be sufficient to meet the capital requirements of a Financial Service Authority stress test, which included testing its resilience to stressed credit risk, market conditions, and economic turmoil.

The bank’s strong position was confirmed by the FSA on Friday, which determined that it is strong enough to weather the economic storm alone and it was not necessary for Barclays to take part in the Asset Protection Scheme.

Barclays had until today to decide whether or not it would take part, and its announcement has come as little surprise to some economists.

The BBC’s business editor Robert Peston predicted on Saturday that Barclays would turn down the Government’s insurance scheme for toxic assets, because, he said, it has seen the price that Royal Bank of Scotland and Lloyds Banking Group have paid for their participation, with both handing over a stake of the bank to the taxpayer.

He also believes that it would want to avoid giving the Government any additional motivation to “meddle in Barclays’ affairs, which could be detrimental to the wider interests of its owners and customers.”

Mr Peston added: “it’s reassuring that the City watchdog believes that Barclays should be able to withstand more-or-less whatever the enfeebled global economy throws at it, without crumbling.”

Barclays will soon benefit from the £4 – £5million injection of cash from the sale of iShares, its fund management business, the funds from which will no longer have to be used to pay the fee for its involvement in the Asset Protection Scheme.

“A better use for the iShares proceeds might be to put it to work in some old-fashioned banking,” Mr Peston suggested.

“In making our judgment about the Asset Protection Scheme, we have looked carefully at the economics of participation, and we have talked to many investors,” said John Varley, group chief executive at Barclays. “This has led us to today’s decision.”

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