Shadow chancellor George Osborne said: "This is a shot in the arm for the economy, but it shows how sick the patient is."
Traders on the London market were also concerned about the message the cut conveyed. As a result, the FTSE 100 share index closed down 5.6%, or 255 points at 4,275.7.
The UK cut was followed by a less dramatic move from the European Central Bank, which lowered eurozone interest rates from 3.75% to 3.25%, to try to boost economic growth in the region.
What's more, the global financial body the IMF sharply revised down its forecasts for economic growth around the world in 2009.
It predicted that developed economies as a whole would contract next year for the first time since World War Two.
The hefty cut will automatically reduce monthly repayments for those with tracker deals that are linked to the Bank rate by about £134 on an average £150,000 mortgage.
Chancellor Alistair Darling calls for banks to take action
However, there have been concerns that a cut in the Bank of England's base rate might not be passed on to other borrowers.
Given the surprise level of the Bank rate cut, mortgage lenders will take their time to decide whether they will pass on cuts to standard variable rate (SVR)mortgage holders, which account for up to 10% of total home loans.
The major lenders said rates were "under review", however Lloyds TSB has promised to pass on the rate cut in full to its standard variable rate mortgage customers.
The group, which also lends through Cheltenham & Gloucester, said its SVR, currently 6.5%, would never be more than 2% above Bank of England base rate. Abbey has also passed on the cut in full to SVR customers.
Customers on fixed-rate deals - about 50% of the market - will see no change to their repayments until they come to the end of their current deal.
But major lenders have been withdrawing nearly all tracker rate deals for new borrowers as they wait to see how the industry reacts to the cut.
The cut is likely to hit savers who face a reduction in the interest rates they receive from their deposits.
'The right call'
The move has been broadly welcomed by business bodies and trade unions.
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