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Speaking at a Treasury select committee meeting on the banking crisis John McFall, chairman of the committee, asked building society representatives if they were able to access all of the new government measures announced in January to help free up lending.

Graham Beale, chief executive of Nationwide, said section 9B of the Building Societies Act 1986, which restricted the creation of floating charges, made it more difficult for societies to make use of the government's £50bn issue of Treasury bills and he wanted it to be changed.

However the lender was unable to confirm whether it had or would trade mortgage assets for Treasury bills if the law was changed.

Lenders were able to swap their high quality mortgage-backed and other securities for Treasury bills up until 30 January through the government's special liquidity scheme.

The government is now finalising the details of the asset purchase facility announced in January, which will allow the Bank of England to purchase high quality private sector assets funded by the issue of Treasury bills.

This is expected to become available in April.

Matthew Wyles, non-retail director of Nationwide, said building societies could access the bills but the difficulty occurred when they wanted to convert them into cash through a sale and repurchase, also known as a repo agreement.

He said: "The difficulty is the standard market way of treating these agreements which is to use a floating charge on the bills and we cannot grant them a floating charge. So we can access the bills but we cannot repo them in the normal way.

"It means we need to repo them in a way which does not breach the Building Societies Act and that costs more money and is harder to do."

Mr Wyles said many lenders were not interested in making the swap for the Bills because of the extra difficulty it created, creating an issue for building societies that wished to offer more mortgage financing to their customers in the current climate.

He said: "It is an anomaly created by a feature of the legislation that never contemplated these kind of sale and repurchase agreements.

"The legislation was drafted a generation ago and the sophistication of the market and building societies has moved on significantly since them. Legislation has simply failed to keep the pace."

Adrian Coles, director general of the Building Societies' Association, said the BSA would support Nationwide in seeking a change to the almost a quarter of a century-old Act.

He said: "Our position is we very much support Nationwide and we will take advantage of what John McFall said to provide a detailed paper on this and we will be doing that in conjunction with Nationwide as soon as we can.

"We want to make it as easy as possible for societies to use all forms of government support that is available to the funding market at the moment and if there is a technical provision in the Building Societies Act that prevents us from doing that then we will put that right.

"It would be great if it could be changed so that the transfer could be undertaken in a straightforward way."

Mr Coles said the BSA had spoken to the Treasury previously about the issue but now he would seek to expedite the matter.

Andy Caton, corporate development director of Yorkshire Building Society, confirmed while it had traded assets for some Treasury bills it had only been a small amount.

He said the issue of converting them was much more of an obstacle for some other building societies that had taken on larger amounts of the bills.

He said: "We would agree with Nationwide and support the proposed change to Section 9B."

Neville Richardson is the group chief executive of Britannia Building Society, said: "In principle we welcome anything that gives building societies a level playing field with the banks. Although this is not something Britannia needs at the moment, we would support anything that would give a level playing field."