The appeal to the country's highest court is likely to be heard by five law lords sometime in the middle of 1999, according to joint liquidators Deloitte & Touche.

The creditors lost an initial appeal against the Bank last week over claims that it wrongfully granted BCCI a licence and did not withdraw it quickly enough.

Unprecedented case

It is the first time a case against a European central bank for breach of regulatory duty has been taken.

"People realise this case is so groundbreaking... it was always going to go to a superior court," a spokesman for the liquidators said.

The hearing at which leave was granted to take the case to the House of Lords, was heard in the Court of Appeal.

BCCI collapsed and was closed by banking regulators in 1991 with debts of $12bn in what was the biggest fraud in banking history.

It left around 150,000 depositors wordwide scrambling to recover lost money. Creditors have so far seen dividends of 46%, or over $4bn, returned to them.

"Every $100m of recoveries equates to an approximate 1% return, so a win against the Bank of England would offer a significant contribution to future dividend payments," the liquidators said.

Case ruled 'indefensible'

The Court of Appeal ruled out a compensation case on the grounds that it was not defensible.

The Appeal judges voted two to one to reject the case, despite being aware of the "grievous losses" suffered by the depositors.