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The paper called for views on changes that aim to strengthen Libor by reinforcing the scrutiny of its contributor banks and expand the membership of its governing body and its panels.

Recently Libor has come under the spotlight as an accurate barometer of the credit crunch, as it follows the rates at which banks perceive borrowing risk in the markets.

As the credit crunch led to stress in the markets, it also stressed this benchmark.

The changes announced include tightening the scrutiny of the rates contributed by banks into the setting mechanism so that any discrepancies in the rates must be justified by individual contributing banks, as well as increase the membership of the Foreign Exchange and Money Markets Committee, the independent body that oversees the process.

The BBA has also proposed to increase the number of contributors to some of the rate setting panels.

Angela Knight, chief executive of the BBA, said: "BBA Libor has stood the test of time. It has been published on every business day since 1985 and is among the most transparent indices in the world. These changes will further strengthen BBA Libor and the confidence of its many users."

Matthew Wyles, group executive director of non-retail at Nationwide, said it was clearly important the global markets had confidence in Libor.

He said: "The steps announced by the BBA are helpful in reinforcing the integrity of the current system. The environment created by the credit crunch has inevitably also stressed the methodology used to set Libor which in turn has led to murmuring that the system could be manipulated.

"The fact is many stakeholders, including politicians, do not like the hard reality which Libor has highlighted, that there has been a crisis of confidence in the interbank markets that has put the cost of credit up.

"While lenders have to pay up to borrow wholesale funds, they will have to pass that increased cost on to their retail and commercial customers."

David Hollingworth, head of communications for Bath-based IFA London & Country Mortgages, said: "This move is more about shoring up the figure created than it is about changing anything in regards to Libor dropping.

"At the end of the day advisers are really concerned with the products lenders are putting out and they are conscious lenders are having funding difficulties. These changes will most probably not impact on advisers but for the market on a wider basis it cannot be a bad thing."