As Your Money’s sister title, Mortgage Solutions, reported last month, Osborne and the Bank of England have been in discussion for some time over an extension to the programme, which is currently scheduled to end in January 2014.

The Chancellor’s announcement could come within the next few weeks, according to a report in the Telegraph, and will include new incentives for banks to lend to small businesses. 

It is also thought the government will also incorporate non-banks in the scheme for the first time.

The mortgage component of the scheme has been widely declared as a success within the industry, but the government is said to have doubts over the amount of extra business lending the scheme has generated.

Osborne is also expected to announce the extension of the whole scheme for a further year, until January 2015.

The move will come ahead of a visit to the UK by the International Monetary Fund (IMF) in May as the government seeks to soften the criticism the body is likely to give its austerity programme.

The scheme’s launch last year was designed to boost lending to small businesses and households by providing banks with cheap loans on the proviso that they pass them on to customers.