Government initiatives to get banks lending have failed, shadow business secretary Kenneth Clarke has said.
Mr Clarke said a Federation of Small Businesses survey suggested only 8% of small firms found banks had made credit available under new guarantees.
He also said the HBOS and Lloyds TSB merger had been a "disaster", more so for the latter institution.
The chancellor, meanwhile, has sought to quell speculation that the Lloyds Banking Group could be nationalised.
On Friday, Lloyds said its subsidiary, HBOS, which the government encouraged it to buy last year, would make a loss of nearly £11bn.
Shares in Lloyds Banking Group, which is 43% owned by the taxpayer, closed down 32.5% after the surprise announcement.
But speaking at the G7 summit in Rome, Chancellor Alistair Darling said: "I've made it very, very clear on a number of occasions that we believe that banks are best run in the commercial sector and privately owned, properly regulated and supervised.
"That's the best place for them to be and our policy hasn't changed one bit."
He has said the government had to intervene quickly at the time of the merger to stop the banking system's collapse
Measures including credit guarantees were launched by the chancellor in January to boost lending.
But the FSB survey that more than half (53%) of small businesses said they did not believe the government's policies would get banks lending again.
Chancellor Alistair Darling said banks are best run ''on a commercial basis''
Mr Clarke told BBC Radio 4's Today programme it was "frightening" that ministers were "dithering" over implementation.
He said there was a "huge gap" between Treasury rhetoric and reality.
"I am just astonished that no-one appears to have had the discussions with the banks about the operation of the scheme from the day it was proposed," Mr Clarke added.
He said he hoped that ministers would "get the banks in, give them the way in which these applications should be handled and get this scheme into practice".
Mr Clarke also accused ministers of "dithering" over taxpayer-backed protection for banks from so-called "toxic assets".
He said that if the government had not forced through what he called a "shotgun marriage", the Lloyds Banking Group might be in a more comfortable position now.
It looks increasingly as if Lloyds HBOS will now go into majority public ownership - followed inevitably by nationalisation
"They should never have been allowed to merge," he added. "Lloyds TSB was a boring bank, it was a steady bank, it hadn't done silly things."
On Friday, when asked whether its losses represented a disaster for the taxpayer that he had caused, Mr Darling said the government had "no alternative" but to act.
"We didn't have months or weeks to look at it, we had to intervene quickly and that is what we did," he told the BBC's Newsnight.
"Now what we've asked the new management to do is to go through the books so we can deal with the assets that have gone bad and the other problems that have emerged."
Mr Darling said allowing HBOS to collapse would have had knock-on effects for all of Britain's banks.
"If we had not intervened... the banking system would have gone down, taking millions of families, millions of businesses with it. No responsible government could have done that," he said.
The extent of HBOS' problems were revealed in a week when the City watchdog, the Financial Services Authority, said it had raised concerns about the way the bank was being run as far back as 2002.
Liberal Democrat treasury spokesman, Vince Cable said: "Obviously we need to digest the detail, but it looks increasingly as if Lloyds HBOS will now go into majority public ownership, followed inevitably by nationalisation."
The expected losses at HBOS were £1.6bn more than it predicted in November.
Much of the blame has been laid at a £7bn write-down at its corporate division, which is heavily exposed to the hard-hit housing and commercial property sectors.
Lloyds chief executive Eric Daniels insisted the company's longer term prospects were brighter.
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