She announced that six million families are caught in the debt trap and are having problems keeping up repayments. As a result, banks and other organisations should be discouraged from offering credit without due consideration.

Speaking at a British Bankers’ Association’s conference, Ms Hutton said: “Lenders should not be offering unsolicited automatic credit increases and cheques on credit card accounts if they haven’t properly assessed the borrower’s circumstances.”

Ms Hutton said banks should base loans on income and credit commitments rather than just payment history.

However, the British Bankers’ Association told BBC News Online that, “lenders have already made great strides towards responsible lending.”

Eric Leenders, director of retail credit at the BBA said, “Lenders have adopted a far more holistic approach to deciding who they lend money to.”

But research commissioned by the credit industry and unveiled at the conference suggests that UK personal debt may not be such a problem. According to the study, only 3.4 per cent of borrowers are finding interest repayments a heavy burden.

Sandra Quinn, spokeswoman for the Association of Payment Clearing Services, believes the problems of personal debt repayments have been merely “overstated”.

She commented that, “The vast majority of people feel comfortable with the amount they have borrowed.”

Nevertheless, concerns over the recent growth of personal debts continue to worry economists. Some experts believe that personal debt will top £1,000 billion by the autumn.