Key business figures have defended the paying of bonuses to City executives despite an economic downturn - after an attack by the chancellor.
Bonuses paid to City bankers in 2007 totalled about £7bn.
Alistair Darling said that firms needed to be able to justify the payouts to those who seemed to have done little to deserve them.
But his comments, to the Daily Telegraph, have sparked a backlash.
Private equity chief Guy Hands has reportedly said government tax policies have made the controversy worse.
In a letter to investors Mr Hands, who heads the Terra Firma group which bought EMI last year, says that the banking and finance sectors should be using the long-term, performance-related bonuses system used in private equity.
The letter, seen by The Sunday Telegraph, says that government tax regimes have encouraged "bonus chasing".
"The future stability of the financial markets would be enhanced if other parts of the financial community followed [a private-equity remuneration model]," he said.
Mr Hands also blasts "high-profile people" who have taken large pay-offs after leaving their roles during the credit crisis.
City bankers were paid bonuses of about £7bn last year - despite global economic woes which saw stock markets lose considerable ground.
The deputy director-general of the Confederation of British Industry, John Cridland, said that the payouts were often important.
"While big-number salaries and bonuses may appear unfair to some, in a world where UK companies face global competition it is vital they can recruit and retain talented executives to keep ahead of the game," he said.
And the director general of the Institute of directors, Miles Templeman, said that bonuses were important, though they should be "performance related and transparent".
They were reacting to Mr Darling's comments that firms needed to "behave responsibly".
"There's absolutely nothing wrong with giving somebody a reward but at the present time when people are going through these difficulties that's something the boards have got to look at," Mr Darling told the Telegraph
"You have to ask - can you justify this? Can you say hand on heart this is the right thing to do? If you can't justify it to your next-door neighbour you should think again."