Speaking on the BBC's Today programme, the acting Lib Dem leader Vince Cable called for urgent legislation to make temporarily nationalising the lender an option, should the sale of the bank to a private company fall through.
He said: "The consortiums that are involved are struggling to raise the vast amount of money that's needed and we are talking here about raising £30bn - roughly the size of the current defence budget - in order to repay the taxpayers' loan.
"At the moment it's bleeding to death - approximately £3 billion two weeks ago and £1.5 billion last week had to be put in additionally.
"Once the bank is under temporary public ownership - I stress it's temporary, not a permanent solution - it enables the banks to be reassured who are lending that there's an absolute sovereign guarantee, and it provides a period of stability."
However, Conservative leader David Cameron said he would not support nationalising the lender, although he did admit that it may be the only option soon left.
"I don't support nationalisation. I don't think it would be right for the government to spend even more taxpayers' money nationalising a bank and suddenly becoming responsible for £100bn of mortgage lending.
"What I want is a private sale, but I suspect that the government is running out of time and running out of money and it may well be that they have to go down the path of nationalising.
"If it does, it will be a monumental failure."
