SHARES in Northern Rock surged today after the treasury unveiled its long-awaited plan to resuscitate the stricken bank as well as inviting new bidders to come forward.

The proposals would see the Newcastle-based lender selling a pool of its mortgages to a financing company, which would sell the government-backed bonds in money markets. It is effectively selling the £25bn Bank of England debt on to investors.

Northern Rock will pay the arrangement fees and expenses for the new funding plans, although the treasury reserves the right to withdraw and examine other proposals if necessary.

Three private sector teams are vying to salvage Northern Rock - a consortium led by Sir Richard Branson's Virgin; investment group Olivant, and the Newcastle-based firm's own management. Bidders will have until February 4 to submit their proposals.

More bidders are likely to come forward when the treasury's adviser, Goldman Sachs, contacts the hedge fund Cerberus and US private equity group JC Flowers - which both carried out extensive work on bids before pulling out last month.

The news of the government's guarantee helped send the shares up from under 70p last week to 92.5p in early morning trading.

As a condition of the financing, the Treasury has insisted it benefits from any increase in Northern Rock's share price, has a say over the payment of possible dividends as well as a range of other provisions appropriate for the provision of financial support of the kind contemplated. The government has dropped its insistence that a bidder repay up to £15bn of the taxpayers' loan to Northern Rock immediately by raising money from a syndicate of banks.

Additionally, the Bank of England and the treasury will have the right, at their discretion, to determine which, if any, of the proposals put forward by the company and other interested parties will receive their financial support.

As part of the financing package devised by Goldman Sachs, the treasury revealed the debt will sit in a special purpose vehicle. The risk of any mortgage defaults will remain with the taxpayer.

Managing director of Bournemouth based Burgess & Lee Limited Howard Lee said: "What it means is that institutions will end up owning parts of Northern Rock. Banks should be autonomous. But the bank's troubles need sorting sooner rather than later."