The Treasury has agreed to protect new savings deposited at Northern Rock.
New deposits at Northern Rock are now guaranteed
Previously the government guarantee did not protect deposits made at Northern Rock after 19 September.
The deal provides breathing space for the bank as it considers possible takeover options or whether it can remain independent.
Northern Rock said it was paying the costs of the Treasury, the Bank of England and its advisers, and the bill was likely to run up to £50m.
"These arrangements will remain in place during the current instability in the financial markets," the bank said in a statement.
"Northern Rock will pay an appropriate fee for the extension of the guarantee to ensure that it does not receive a commercial advantage."