(BRUSSELS) - The European Commission has approved a revised Irish scheme to guarantee bank deposits, after an initial plan angered EU neighbours, and a British bailout scheme which became a blueprint for others.

In both cases the EU's competition watchdog decided that the emergency schemes were compatible with European rules and avoid "unnecessary distortions of competition".

The British and Irish plans, which met with vastly differing responses in Europe when originally announced, were both deemed to be appropriate means to deal with "a serious disturbance" in the two economies.

The approval of Britain's half-trillion-pound (874 billion dollar, 640 billion euro) bank rescue package intended to stabilise financial markets, augurs well for similar plans announced by other European governments inspired by the British model.

The financial support measures announced throughout Europe now total about 1.7 trillion euros and are not expected to stop there.

Dublin had to alter its original bail out plan quickly after upsetting its European neighbours. British Prime Minister Gordon Brown has been hailed for forging the blueprint for European rescue packages.

The key change between the original and revised schemes was Dublin's decision to broaden its guarantees to cover foreign-owned banks.

Ireland's unilateral six-bank deposit guarantee plan early this month was condemned by European countries as a decision that would distort competition, with German Chancellor Angela Merkel describing it as "unacceptable."

Since then, however, countries including Austria, Denmark, Germany, Greece and Portugal have taken similar decisions, while others such as Britain have raised the amount of personal deposits they guarantee.

On Thursday, to assuage some of the anger, Ireland extended its blanket guarantee on bank deposits to five foreign-owned banks.

Apart from not discriminating against a bank's country of origin, the new scheme contains a pricing mechanism covering the plan's costs and appropriate safeguards to limit abuse of it.

EU Competition Commissioner Neelie Kroes said "this case illustrates how we can work together with member states to design measures that help to solve the financial crisis while avoiding negative effects on other member states' banks. "I am very pleased with the constructive attitude of the Irish authorities," she added.

The three-part package, announced last week makes available 200 billion pounds (349 billion dollars) in short-term loans and another 250 billion pounds to guarantee loans between banks.

The government also said it would also make taxpayers' money available to buy shares in troubled banks, providing them with fresh capital in a bid to prevent a collapse of the banking system.

On Monday, the British government pumped 37 billion pounds into three struggling banks, sending world stocks soaring.

The government hopes the measures will overcome the reluctance of banks to lend to each other, which is at the root of the current crisis.

"The excellent cooperation with the UK authorities and our streamlined procedures have allowed the Commission to approve very quickly this innovative and well-designed support scheme for UK banks," said Kroes.

"The scheme will contribute to the recovery of European financial markets, without creating undue distortions of competition."

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