The fund, which aims to build long-term financial capability for those who are “left behind”, will provide financial advice and assistance to lower-income sectors of the population.

It will “support projects promoting access to affordable credit, providing money advice and helping to protect vulnerable people against illegal money lending”, Mr Balls said.

The government is waging war on loan sharks and trying to encourage financially excluded families to borrow from responsible credit unions instead.

But commercial high street banks must also “develop options to most effectively engage with customers in financial difficulty”, Mr Balls added.

There was “more to do” for banks to take responsibility for financial inclusion, he noted.

Citizens Advice, a charity which advises on millions of UK citizens’ debt problems every year, welcomed the new measures warmly, describing them as “great news”.

“Financial exclusion has a huge impact on thousands of the most vulnerable individuals and families in society,” making a sustained commitment from policymakers critical, director of policy Teresa Perchard commented.

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