The Bank of England has warned of a "material risk" to the UK's financial stability after being forced to buy up more government bonds.

The central bank increased the number of bonds it was buying on Monday, as part of a scheme that ends on Friday.

That saw government borrowing costs rise sharply and a downturn in the markets, and the bank has once again been forced to step in as it announced it would buy a greater range of bonds to "restore orderly market conditions".

It warned: "Dysfunction in this market, and the prospect of self-reinforcing 'fire sale' dynamics pose a material risk to UK financial stability."

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Uncertainty over the bonds has led to fears for British pensions, but the deputy Prime Minister has moved to assure people.

Therese Coffey said on BBC Breakfast: "I’m absolutely confident pensions are safe, the Bank of England is independent and undertaking its role in trying to bring some stability, which it had done.

“I’m not aware of the details of exactly what’s happened this morning. The short briefing message I’ve had from Treasury is that it’s a technical financial stability.”

The move by the Bank of England has led to renewed criticism of the 'mini-budget unveiled by Kwasi Kwarteng.

The Chancellor has already been forced to bring the date of his fiscal plan forward by three weeks to October 31, and his handling of the economy has again come under fire.

Shadow chief secretary to the Treasury Pat McFadden said: “That the Bank of England has been forced to step in for a second day running to reassure markets shows the Government’s approach is not working, and creates renewed pressure for the Chancellor to reverse his Budget.

“This is a Tory crisis made in Downing Street, being paid for by working people.

“They have lost all credibility and control and they must respect our nation’s independent institutions, go back to the drawing board and reverse this damaging Budget.”